Life coaches all over the world will tell you that by simply setting goals, you can start to create the right type of mindset to achieve them. Just thinking about or writing down your goals is a step in the right direction. When it comes to finances, it only makes sense to set a few goals in place, so that you have something to work towards, and of course have the right mindset to achieve the goals you set out. Whether you have goals to pay off outstanding debts or save for a family vacation, if you don’t define what those goals are, you stand the chance of never actually achieving them.
What the UK Statistics Say
Finances are a very personal thing, but without the correct planning, people can suffer very similar negative impacts. It’s important to be in control of your finances now if you wish to avoid facing difficulties in the future. The statistics in the financial industry are very telling. According to Money Wise, one in every five adults in the UK has absolutely no financial goals. You can read more on the consequences thereof on their website. The Independent also released an article just last year that states one quarter of the British population has no savings in place! These are scary statistics!
Let’s Set Goals…
Ready to set financial goals, but don’t know where to start? Consider these 6 short term and long-term goals that everyone should have.
1. Create a monthly budget
This is probably one of the most important short-term financial goals to have. Without a budget, you cannot plan your spending and you will struggle to save effectively too. By simply drawing up this budget, you will be able to see immediately where you need to reduce spending and can plan to reduce your monthly expenses. When you physically see what you are spending your money on, you can start to cancel unnecessary accounts, reduce contracts, and even stop services that you don’t actively make use of, but are still paying for. A budget can be a powerful tool for gaining full control over your finances.
2. Choose 3 bills to actively cut back on
This is another of the important short-term financial goals to set. You don’t have to do this long term, but by taking a break from your usual expenses for a brief period can provide much-needed financial relief and even help you to actively start saving money. For instance, if you can reduce your entertainment costs for 3 months, do it! If you can pause your online streaming services, reduce your heating costs, and stop going out for dinners for a few months, you can actually save quite a chunk of money. After creating your budget, your particular task will be easier to do.
3. Set up a fixed savings account
When it comes to short term financial goals, savings are one of the most important. If you are unable to save each month now, you could find yourself in a difficult situation in the future when emergencies crop up or you don’t have enough for retirement. Take a look at your salary and your budget and decide just how much you can afford to save each month. Set up a fixed debit so that the amount is automatically taken off your bank account each month. You will be grateful for this stash when something comes up and you aren’t caught off guard with expenses you cannot afford.
4. Create multiple income streams
When it comes to long-term financial goals, you need time and dedication to make them become a reality. Creating multiple income streams will help you to enjoy financial freedom over the long term. In addition to your regular job, you could start up an online business, look for weekend and afterhours work, or turn a hobby into a way to make money (photography, child care, lessons etc).
5. Actively tackle debt
Clearing all of your debt in one fell swoop might seem a little overwhelming, but with a bit of effort it can be done. You don’t have to try pay everything off at once. Choose just one debt to start with and focus on that. Perhaps you have a store account with a small balance that you can settle, or you can channel all extra money into that credit card with a high interest rate attached. By focusing your attention on becoming debt free, you will be able to soon free up a lot of your cash flow.
6. Start an education fund for the kids
It’s never too early to start saving for the kids’ education. If you have kids, you know there will come a time when you need to send them on to university. That’s going to cost a lot of money all of a sudden. If you aren’t prepared for it, you could find that it cripples your finances or puts both you and your kids in a bad position. You should be saving a fixed amount every month to go towards your kids’ education. When the time comes around for after-school studies, you won’t feel overwhelmed with the expenses that follow.
Importance of Setting Goals
Setting financial goals is like setting your mindset for success. It requires dedication and for you to be honest about your spending habits and behaviours. If you aren’t fully aware of your financial position and ways in which you can save, you won’t be able to get ahead financially. The Money Advice Service in the UK provides helpful steps and insights into how to go about setting financial goals, which you can read on their website.
If you wish to experience true financial freedom, start setting your financial goals today.