Tips For Determining Your Financial Goals If You Have No Idea Where To Start
Setting goals for anything can feel like a task that is simultaneously exciting and daunting. Whether it's a resolution for the upcoming year, intentions for keeping your household in order, or finding financial goals that will get you to where you want to be, it can often be easier said than done to set those goals and actually follow through. Don't be disheartened, though. No matter where you are in your life, there are tangible ways to achieve the goals you set for yourself. When it comes to finances and money matters, there are plenty of ways to figure out how to create a safety net for yourself while propelling your lifestyle towards your desired benchmark of financial success. If you don't know where to start, you aren't alone.
CNBC reports that taking small, reasonable steps towards determining your financial status and aligning it with your aspirations for how you want for your life to be in the future is completely doable — no matter where you currently are in your financial planning. Perhaps you want to set up educational funds for your children, purchase your dream luxury car, or move to a new city. The good news is that no matter what you hope to achieve, there is most certainly a path from your current financial situation to where you'd like to be in the future. Here's how to figure out what your financial goals should be and how you can start taking steps to achieve them.
Lay out your lifestyle
The first step in creating financial goals for yourself is to realistically look at where you are right now, what your financial demands are at the moment, and the overall status of your monetary standing. Do you have a savings account? Do you have investments? What about stocks or an account for retirement? If you don't have any of these things, there's no need to panic. Yes, having a rainy day fund to serve as a safety net in case something goes awry in your life is a good thing to strive for. But it's also normal to have ebbs and flows in your financial footing.
In order to set goals for the future, you must first figure out what your current financial landscape is like. To do this, grab a piece of paper or a notebook and write out your current budget, including financial obligations such as bills and expenses. Then total up the amount of income you bring home each month. Compare your income against your expenses, including things like groceries and gas, to see how much money you potentially have left after paying all of your monthly bills.
CNBC warns that you don't want to set goals that are impossible to achieve because they realistically don't align with your current financial positioning. However, just because you may not be able to afford to save hundreds of dollars each month right now doesn't mean that you can't achieve your financial aspirations in the future.
Imagine your ideal life
Fantasizing about your dream life might sound cliche, but spending time determining what your ideal life actually looks like can help you decide on what your financial goals should be. It might be a dream of yours to travel the world, so taking time to determine which places you'd like to visit, the cost of travel, and how much money you should set aside each month are the first steps in starting your global journey. Similarly, you may wish to earn your degree, buy a house, prepare for retirement, or save for other ambitions.
In crafting your future ambitions, U.S. Wealth Management recommends finding connections between your financial aspirations and motivations that are deeper and more meaningful than the number of digits listed on your bank statement. Many people design financial goals around security for their family, like building a rainy day fund in case someone in the household loses a job, or establishing college funds for children. Perhaps you've always wanted to start your own business. Determining the financial expectations for establishing a small business and setting aside enough money each month to be able to launch your dream company can provide more incentive to achieve your financial goals than simply putting money into a savings account. When you're curating your financial plans, take time to mindfully think about your deeper desires in life. Once you have them in mind, build your financial goals around the larger meanings close to your heart.
Start small and think smart
When starting out on your journey towards your financial goals, it's better to start with small, manageable goals. Going too big, like deciding you'll suddenly start saving thousands of dollars each month to purchase a house, can quickly become overwhelming and rarely end up being doable aspirations. Instead, begin with goals that are easy to meet, and soak up the joy of the small wins.
According to NerdWallet, one of the most effective ways to set, maintain, and follow through with financial goals in a smart way is to do exactly that, be smart by following the S.M.A.R.T. acronym. The financial goals you set for yourself should be specific, measurable, achievable, realistic, and time-bound. For instance, if your goal is to save enough money to purchase a new car, then you might set a specific aim to set aside $100 each month until you have enough for a down payment.
Each month, you can measure how much you've saved towards your financial goal while remaining open to reassessing your benchmarks should your financial situation change. You might discover that $100 each month is too much and that saving $75 per month works better for your budget. You want to make certain that your goals are realistic and that you're striving for setting aside enough money to afford the down payment for a new car in time to meet the other needs in your life, such as transportation to work or travel to see family members.
Create a community to cheer you on
Just like achieving other goals in life, such as a promotion at work or another milestone, having a community around you to support you in your financial goals and cheer you on as you achieve them is extremely important. Money can be a taboo or sensitive topic to discuss with others, but if you create a genuine support system around you then you're likely to find that you'll feel more confident in being able to reach your financial aspirations. With any type of ambition, having a support system reduces your stress, increases your well-being, and betters your chances of quickly rebounding from setbacks. A support system or close community of friends, colleagues, peers, neighbors, or family members can provide advice and feedback on your goals, and you may discover that the people in your life have similar financial desires. Feeling supported in some way, including through online communities, will help you be successful with your financial objectives.
In a household setting in which you may have shared finances with a spouse or other family member, it's important to maintain clear communication about both your joint and individual financial goals. Approximately one in three couples with shared finances report experiencing significant stress and conflict around money matters, states the American Psychological Association. However your household finances are set up, be certain that you're actively checking in with your partner so that conflict can be mitigated.