If you don’t know how to prioritize and set your financial goals or objectives, you cannot succeed in life. Many people are not fully aware of the true significance of personal financial planning. This lack of awareness forces them to waste a lot of their hard earned money. It is really difficult to know how to prioritize your financial goals. Nobody can come up with a hard and fast rule to handle personal finances. There is lot of subjectivity involved with this aspect. Is it necessary to keep an emergency fund? How to save some money for retirement? Should debt be paid off immediately? How to focus on good investment opportunities? You may get different pieces of advice when you ask these questions to different people. In such a situation, taking a decision becomes a difficult task for you. The important thing is that you need to figure out a way to prioritize and set your financial goals or objectives after assessing all related aspects in an objective way.
Understand what exactly you want before setting up goals or objectives
You cannot take purposeful and meaning steps if you are unable to take smart decisions on your short term, medium term and long-term goals. You need to have clear idea about the current phase you are in. It is also equally important to know what you want. Decide on your financial goals. It can be purchasing a new home, making an emergency fund, starting a family life or something else. When you decide on all these aspects, you have to take into consideration your short term as well as long-term goals.
Take smart decisions based on your short-term and long term goals
It is critical to analyze your both short term and long term goals before taking important decisions. Probably, you are interested in planning a family vacation to USA within the next three years. You would also like to have some reserve money in your bank to take your partner and children for a wonderful dinner twice in a month. At the same time, you may also need to build a dream home within the next 10 years. Allocating funds for the higher education of your children can be another long term goal. Whatever might be your requirements, it is necessary to create smart goals.
Your goals must be specific, relevant and achievable
You need to set realistic goals. To be more specific, your goals should be specific and measurable. They need to be relevant and achievable. Time-bound goals must be set as well. If you are planning a trip, you need to know how much cash you need to make the trip enjoyable. A specific location needs to be chosen based on your tastes, interests and budget. There has to be a feasible time-line with clear tour itinerary. When you set each goal, you should have clear awareness about all these aspects. This approach helps you set up and accomplish each goal. You can be ambitious, but must be vigilant not to set up yourself for failure with limited time and resources. If you find it difficult to set up realistic goals, you can seek professional help. Experienced financial planners assess your case in a detailed manner before helping you formulate financial goals that are achievable. Top services also provide necessary support solutions to make your financial journey a successful and meaningful one.
Use your head, generate ideas, make a list and eliminate unrealistic ones
You have to use your brain to generate ideas. No matter where they are realistic or unrealistic; you have to have some ideas to choose from. It is always advisable to prepare a written list of your ideas. After having written your financial goals, you need to revisit these goals to eliminate unrealistic ones based on your current situation. It is necessary to be consistent and you need to ensure that you are on the right track. If you feel that you are not on track, analyze each goal carefully. Think about why you set your goals. One of the most important things to understand is that you cannot be really hard on yourself while setting up or revisiting goals. All successful people keep on toying with many ideas and changing several times to find the right track. You also have to undergo this trial and error method process for some time prior to identifying the right formula for success. Adjustments should be made immediately because making changes in the half-way can be really difficult.
Learn the art of prioritizing your list
When you manage to figure out your goals after giving a careful thought, you must make efforts to prioritize your personal financial goals in order of relevance and importance. The next step is to decide how long you need to save for materializing each goal. Debt elimination should be your top priority. If you don’t settle your debts, you may ruin your finances over a period of time. When you prioritize, you have to give more weight to paying off debt than saving or college fund of your children. It is not wise to purchase a new car instead of taking care of your retirement and put it on track. If you allow debt to accumulate, you are taking you further away from achieving your goals. Smart people make use of refinancing or debt consolidation options when debt handling becomes a difficult task.
Always maintain an emergency fund
You can find a lot of people living without any emergency fund. It is a great mistake to live without an emergency cash reserve. Where you are going to go if you need some immediate cash to meet an emergency need? You must maintain an emergency fund if you don’t want to create situations where you are forced to ask money from friends or relatives repeatedly. Proper financial planning helps you get rid of these situations. Generally speaking, it is necessary to keep at least three months of your salary in a savings account. Once this approach is maintained, you can definitely think about contributing to investment opportunities of your preference. Hasty decision should not be taken and you need to follow the habit of maintaining an emergency fund for very long time.
Follow the simple rule of making money
There is only one rule that is applicable to all people. Make more money. This simple rule always helps you achieve your financial goals in a fast manner. Additional cash can be generated if you look at options like side hustles. Unfortunately, not many people can allocate time for these types of jobs that generate extra income. If you are one among them, you can explore options such as asking for salary hikes. After having worked hard and put up commendable performance, you can negotiate with your employer for a hike in salary. Some people ask for a pay hike every month. It can be a scary experience for underachievers. Good performers can choose this option to make more money. The timing needs to be correct when you are asking for an increase in salary. Otherwise things can backfire and the employer would find you as a greedy person. You can ask for a hike after closing a big sale or reaching a significant milestone. A pay raise should not be conveyed through an email or letter. You have to speak in person to convince the superior officer. If you feel confident and prepared to convey your case assertively, you can make use of this method.
Develop and maintain a well thought out budget plan
If you want to achieve all your financial goals, you must design, develop and establish a well thought out budget plan. It is equally important to follow this plan for a long period of time. You can start the process of formulating budget by outlining all monthly expenses. All aspects including mortgage payments, utility bills, insurance premiums, food expenses, fuel expenses, and rent must be covered. You should also allocate a specified amount as savings based on individual circumstances. This category needs to be considered like other expenses in your life. If you follow this method of approach, you can save a lot of money in the long run. You learn how to place a priority on improving your savings monthly irrespective your condition. This method of approach helps you stay close to your short term as well as long term financial goals.
Consider quarterly and yearly expenses and create a spreadsheet
The experts are of the opinion that a debt issues stem from budgeting issues at its core. In addition to creating a monthly personal budget, you have to consider the bills that need to be paid on quarterly or annual basis. Some examples are vehicle maintenance expenses, auto insurance premiums and property taxes. It is always advisable to create a spreadsheet where you can add all types of expenses systematically and keep track of them in a timely manner.
Allocate 50% for living expenses, 30% for recreation and 20% for savings
You can apply some standard rules for budgeting to achieve your financial goals in a fast and efficient way. Leading financial planning experts are of the opinion that people should not allocate more than 50% of your income for meeting necessary living expenses like rent, utility bills and grocery bills. You have to invest 20% of your income on retirement accounts or savings. The remaining 30% can be utilized for miscellaneous things that are nonessential in nature such as gym membership fee, restaurant bills, recreational expenses and other types of entertainment costs.
Use technology to transfer savings automatically
Technology can contribute a lot in helping you accomplish your financial objectives or goals. Once you decide to allocate at least 20% of your income to savings or retirement account, you can use the power of technology to automatically transfer the amount. Since the cash is transferred automatically, you won’t get a chance to use it for another purpose even temporarily. Many people use the automatic process to keep themselves on the right track to attain financial goals because all leading credit unions and banks offer this service without charging any fee. This type of payment setup can be done online with effortless ease. You can rely on this method to pay all bills and debts as well. In such a situation, you don’t have to worry about missing a bill payment which in turn can adversely affect your budget plan.
Follow a balanced approach with the help of trusted financial planning service
Learning how to prioritize and set your financial goals or objectives is not an easy task. You need to have a balanced approach to formulate a plan and achieve your goals. It is not possible to tackle all things all on a sudden. When you try to solve things fast, you easily get overwhelmed. Systematic and meaningful steps need to be taken gradually to ensure smooth progress. It is always advisable to conduct discussions with your partner and friends monthly to assess the existing condition and making the necessary changes. The best idea is to seek the help of a reputed financial planning service provider to design and develop a customized budget plan that meets your exclusive long term and short term goals.
Make necessary changes without disturbing the overall structure of your financial plan
The long journey to achieve your financial goals cannot be termed as a static process. This is a journey through which you have to keep on adding new things based on the newly emerging situations. The review of your list of goals should also be done. The key is to progress on them and stay flexible whenever needed without disturbing the basic plan. As you get used to a systematic financial planning approach, you become financially stable with adequate savings and reserve funds. This situation allows you to free up time to think and explore other advanced and larger priorities like real estate investing.
If you want to lead a purposeful and meaningful life, you need money. Adequate availability of cash can only be ensured with proper financial planning. Many people work hard for a long period of time without any concrete plan. They feel terribly disappointed after retirement due to lack of necessary funds. You should not commit this mistake and start planning at a younger age itself. A sustainable financial path is what you need to achieve short as well as long-term financial goals. There are experienced financial planners available who have the expertise to formulate a fully customized financial plan that helps you achieve your goals in the most productive way.