Whether we like it or not, money is the biggest hurdle we have when reaching some of our life goals. That is why it is crucial for our self-development and improved quality of life to set and achieve our financial goals.
However, it is easier said than done. Otherwise, 100 percent of the world population should be in the 1 percent by now.
If you want to set and reach your financial goals, here are ten smart ways to help you do that:
1. List down all your financial goals
People’s most essential financial advice would be to save money or to avoid expenditures. However, your financial goals don’t always have to be on the defensive.
There are tons of financial goals that you can strive for depending on your wants and needs. They can be as simple as saving a certain amount of money in the bank to something as particular as affording a house.
Either way, you need to take the time to list down all your financial goals. Don’t try and emulate other people’s financial goals. Focus on your lane.
You have to figure out what your priorities are. What might be a goal for others may not even be in your financial pathway in the first place.
That is why you have to take the time and talk to yourself about what you want your financial situation to be and what is financially stable for you.
2. Keep track of your expenses
Once you know your financial goals, it is time to understand your cash flow. It is common for people to reach a point where they ask themselves where all their money has gone.
You don’t want that to happen to you. That is why you need to keep track of all of your expenses. It can be challenging to do at first, but it all comes down to self-discipline.
Once you build the habit, it will be a lot easier to have an accurate view of where your money is going.
When you have a better picture of your cash flow, you’ll better understand where your priorities should be. You’ll also be able to better diagnose your financial goals and the hurdles standing in your way.
When you know your financial habits, both good and bad, it will be easier to step forward and reach your goals.
3. Start budgeting
Now that you have a better picture of your cash flow, it is time to discipline yourself and start budgeting.
Keep in mind that you have to be strict in implementation. But you also have to consider some flexibility, especially in cases of emergencies.
That is why your budgeting limits should be a range instead of a strict limit.
Knowing your cash flow and where all your expenses are will help you create a reasonable budgeting limit. Remember that you are deciding your budget range that you don’t consider the months when you were spending more extravagantly than usual. You have to be realistic.
You can’t achieve other financial goals if you don’t have the necessary discipline of budgeting. That is why you need to develop this skill.
4. Build an emergency fund
Aside from your savings, you need to make sure that you build an emergency fund. Your savings should not be your emergency fund; these two are entirely different things.
Your savings usually would be what you tap into for your regularly occurring expenses, such as utilities and the like. On the other hand, your emergency fund is the money you are going to use if you have some form of emergency that blindsides you. For example, car maintenance issues, unexpected medical treatment, and so on.
You can even use them for unexpected home maintenance problems that crop up that shouldn’t be happening.
Your emergency fund should have about three to six months of your total expenses accounted for in there for it to be full. After that, it is all about maintaining that money in your account.
There is nothing worse than being unable to deal with emergencies just because you don’t have the fund. An emergency fund provides you that safety net. Once you have that, you’ll realize just how freeing it is to know that a single emergency won’t have you financially paralyzed for a long time.
5. Live below your means
We know that people hate this suggestion, but living below your means ensures that you don’t develop unnecessary expenditures. It also helps you control your spending habit to an acceptable amount. When you live below your means, it is easier to save more money and reduce your account’s cash flow.
When people start earning more money, they begin to feel bolstered by the money they now have. The tendency here is that people start spending faster than the money they can make due to the excitement. However, this is setting yourself up for long-term failure. Therefore, you should always live below your means.
6. Pay down your debt
If you have debt, make sure that your financial priorities would be to pay your debts off. Debts are a substantial financial burden, but they can also drain you mentally when you have them weighing you down.
Whenever you buy anything a little more than what you usually spend, you won’t feel comfortable because the debts will be at the back of your mind.
Don’t let yourself suffer through that mental burden. Focus on paying the debts off as soon as possible. When you focus on paying off your debts early, you are not going to end up paying more money in the long run.
Don’t spend your extra money on unnecessary items when you have a debt to pay. Of course, you are allowed to reward yourself, but be realistic and practical.
Besides, the best gift you can give yourself is peace of mind, knowing you are debt-free.
7. Save, save, save
No financial plan is going to be successful if you don’t include saving money in it.
If your money is all going outward, even if it is for investments, you are setting yourself up for massive failure. Not only is it risky, but it is also downright foolish not to save your money.
You need to have a short-term savings account as well as a long-term one. The first savings account should be for saving money that you are free to spend, whether it is for bills or leisure.
However, your long-term savings should be going towards a livable future.
Long-term savings can be for your more considerable expenses, both essential and pure pleasure. When you have savings, you’ll find that you are less inclined to want to spend recklessly, so build a saving habit now.
8. Make smart investments
Whether you want to invest or start a business, what is important is that you make smart decisions. The best way to know how smart your decisions are would be by doing thorough research before committing to anything.
For both investments and a business, extensive risk analysis and other research are very useful.
It is easy for people to tell you to invest. However, not anyone can lead you to the right path of where to invest. That is why you need to do your research before you dive into anything.
Remember that when something seems too good to be true, it most likely is.
Depending on your comfort level with the level of risks you are willing to take, different investment options will be available to you. Remember that if you are eager to make risky investments, you have to make sure that the money you are using won’t be digging into your savings.
You can’t start investing if you haven’t created a financial cushion for you in case the investment fails. On that note, remember that just because you invested your time, money, and energy into something, it doesn’t mean that you are going to reap the rewards. Managing your expectations is the key to smart investing.
9. Surround yourself with like-minded people
It won’t be easy to live a life of financial stability if you surround yourself with people who do the opposite.
Even if we believe ourselves to be mentally healthy people, there is no doubt that our social circle will influence our behavior. That is why, for the sake of your financial goals, you want to surround yourself with people that have the same goals as you.
When you surround yourself with people with the same financial goals as you, it doesn’t mean you have to cut off people close to you that aren’t. You need to know when to be with them and when they are starting to get you off the path leading to your goals.
The right people will motivate you, support you, keep you disciplined, and hold you accountable for your goals.
10. Learn about personal finance
Knowledge is power, especially when it comes to managing your finances. Unfortunately, schools don’t help us with personal finance. Still, they offer us the foundational knowledge we need to understand personal finance should we want to study it.
Taking the time to educate yourself will help you stay on top of things and control your finances. It doesn’t feel like time passed you by, and your money drained away without you knowing.
When you attend seminars or conferences, you might connect with like-minded individuals with the same goals as you.
Over to You
Wanting to be financially stable is easier said than done. But with the help of the methods above, you should have a fighting chance.
It will all come down to your self-discipline and ability to stick to your goals. Remember that the path to success isn’t a straight and smooth road. It is going to be bumpy and will have its ups and downs. But as long as you keep at it, you’ll be able to achieve your financial goals soon.
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Andi Croft is a freelance writer whose main interests are topics related to business, technology, and travel. This is brought about by her passion for going around the world, meeting people from all walks of life, and bringing along with her the latest tech to enhance her adventures. Follow Andi on Twitter.