Setting goals is very common this time of year. Lose weight. Get healthy. Book a holiday. We advocate including financial goals when you’re doing your goal setting – whether it be on a personal or professional level – your finances play a big part in your life.
Why set financial goals?
Many people neglect to include financial goals when they set their intentions for the year. But there’s some data we’d like to share and it’s a little scary.
1 in 3 Australians is experiencing financial stress. This means around 30% of the population are struggling to pay bills, living pay to pay and feeling negative about their finances. The impacts of financial stress are far reaching on your relationships and personal wellbeing.
Which is why it’s important for you to take some time to set financial goals, and ensure you’re working on your financial wellness just as you would your health or mental wellness.
How to set a financial goal
The first step is to look at what you want to achieve (i.e. buy a house) or whether you are having some debt to pay off (i.e. credit card) this will likely determine what you focus on. We like to use SMART goals when we set our financial goals.
One example goal is to save money. To make this a SMART goal we would add a time frame, attach a dollar value and ensure it’s within our means to achieve. A SMART savings goal might look like: I’m going to save $10,000 this year, by saving $200 per week.
Creating a strategic plan to achieve your goals
Once you’ve established what your goal is, the next step is to decide how you are going achieve it. If you want to save $200 per week, then you might need to do things like set up a savings account or term deposit or set up a direct debit for $200 from your pay each week.
You might also need to reduce what you’re spending. We’re not advocating you deprive yourself of all life’s pleasures. What we are suggesting is that you find where in your budget you can make changes to help achieve your goals.
How to hold yourself accountable
Whether you tell someone your goals and let them have access to your savings tracker (this might be a bit extreme but it certainly helps if you need the discipline). Or you simply check in on your account to make sure you’re sticking to your goal – it’s important you don’t just set and forget.
Take some time once a week or month to review where your goal is at. This does two things; number one is you are staying on top of where you are at and can see whether you are on track. Number two, seeing your savings grow or your debt reduce is motivating. Just like losing weight, you get the same buzz of excitement when you can visually see your achievements.
Keep at it
Like any goal, you’re probably going to have great leaps forward and some stumbles along the way. But stick to your goal and make sure you keep checking in on yourself. As your circumstances change you may find your goals change too.
For some great apps and resources on savings and property, check out this article on our blog.
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