Setting financial goals is an important step in planning your financial future. It can help you stay on track and make sure that you make progress towards your long-term goals. But before you start setting financial goals, there are a few steps you should take to make sure you are setting realistic, achievable goals. With the right plan, you can take control of your finances and achieve your goals. Here are some key steps to take before setting financial goals.
Assess Your Current Financial Situation
Once you’ve figured out where you stand financially, the next step is to jot down your goals. Take a look at your current financial situation and your financial solutions advisors and assess your income, expenses, debts, and savings. This will give you a better understanding of where you are financially and what you need to do to reach your goals.
Assess Your Income
List all your income sources, such as jobs, investments and bonuses. Determine the amount you spend on monthly expenses, from rent and mortgage payments to your cell phone bill. Factor in some emergency savings too.
Set Short-Term Goals
Now that you have evaluated your debt, analyzed your income, and created a budget, it is time to set some financial goals. It is important to set both short-term and long-term goals. Short-term goals can help you stay motivated and give you a sense of accomplishment when you meet them. Examples of short-term goals include saving for a down payment on a house, paying off a credit card, or making an extra loan payment.
Set Long-Term Goals
Once you have set some short-term goals, it is time to set some long-term goals. Long-term goals are important because they can help you stay focused and motivated. Examples of long-term goals include saving for retirement, buying a house, or paying off all your debt. Working with a financial services advisor like Achieve can help you set realistic, achievable long-term goals. Achieve financial services can help you get organized and map out a plan for success. From understanding your current financial situation to defining your short and long-term goals, you’ll find the tips and resources you need to get started.
Assess Your Expenses
Break down your budget items from the ones that take up the most of your money to the ones that you can do without for a short period of time. In total, use about half of your annual gross income for these expenses; make sure that you are taking care of current bills so there is no risk in not meeting future obligations. Next, categorize your expenses into three categories: necessities, wants and wants not-necessities (or luxury items).
Determine Your Debt to Income Ratio
It’s up to you whether you want to work on reducing your debt ratio or not. However, if your debts are overwhelming it might be worthwhile for you to focus on offsetting the high interest rate of your debt with the earnings from your investments. Once the debts are under control, then focus on building up a savings account by saving at least 10% of your annual income. Doing so will ensure that you have enough funds in case of emergencies and will also allow you to take advantage of financial solutions opportunities that might come up in future years.
Create a Budget
Having a budget helps you limit your spending by keeping track of the income and expenses, as well as set the budget limits. Knowing what comes in and what goes out is an essential component of any financial solution strategy. A proper budget helps you monitor your spending so that you can determine whether or not your goals are feasible to achieve within the next few years.
Setting financial goals can help you stay on track and make progress towards your long-term goals. But before you start setting financial goals, it is important to take the time to evaluate your debt, analyze your income, and create a budget. With the help of financial solutions advisors at Achieve, you can set up a plan that works for you and get the help you need to achieve. Achieve can help you set realistic, achievable short-term and long-term goals that can help you reach your financial goals and achieve the financial future you desire.