Setting financial goals can be an empowering and challenging task. However, there are several ways you can achieve your financial goals, which include financial freedom and financial security. First, you need to start with a financial plan, which is a road map that will help you fulfil your dreams.
In this article, we will discuss six powerful tips, that can help you set and achieve your financial goals.
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Get an Advanced Degree
Many financial planners will tell you the first step in achieving your financial goals is your capacity to earn more money which is an important part of meeting your goals.
Study shows that people with advance degrees have greater earning potential than those without a degree. They tend to have greater opportunities for advancement and more discretionary income for investments. Learning about wealth management, passive and residual income, and investment can help you increase your income by learning about ways your money can work for you.
Create a Financial Plan
Starting with a solid financial plan can help you achieve your goals. Your financial road map will start out vague, but as you work your plan things will become more apparent.
The first step includes making a monthly budget, which can help you organize your finances, and help you keep track of your spending. A budget is an accounting your income and your expenses. Your budget should be realistic, and it should include take-home pay, utilities, mortgage or rent, food, transportation, entertainment and loans. The money that is left over after you subtract your expenses from your take-home income is called discretionary income. Many people even allocate the tax refund they get after filing taxes online which is an easy first step to take.
Using spreadsheets like Google docs and excel can help you track your progress. Budgeting apps that can be sync with your financial institution can make budgeting easier.
Building an emergency fund is vital to your financial well-being. It can help you meet unforeseen expenses such as layoffs, emergency repairs, loss of income, and other major expenses. To build an emergency fund, you must set a goal for the amount of protection you need for living expenses which experts recommend as three months of living expenses.
If saving three months of living expenses is difficult, then you should decrease your current spending or increase your income or both. These changes will help you meet your short and long term goals.
There are several ways you can decrease your spending and stay within your budget. Look for discounts whenever possible, whether it deeply discounted, store brands or second-hand brands. Purchase what your family need only. Being wise can help your family and can help you meet your financial goals.
Purchase Insurance (Life, Car and Health)
Insurance can help you in many ways to meet your financial goals. Life insurance can be a vehicle for your future family needs, and it can use to pay off debts. You can purchase insurance through work at little or no cost, or you can get insurance quotes from your local insurance agent or from an online verified website.
Having car and health insurance can ensure that a severe illness or accident will not cause you financial hardship, such as loss of income. With life and health insurance, you are prepared for the what-ifs in your life.
Establish Good Credit
Having a good credit score can be a financial benefit to your financial planning. Managing credit card is one of the biggest financial issue people face with their finances. To save money, you should avoid your credit use. The only exception is for emergencies.
The average credit card interest rate on unpaid balances is 17 per cent. Credit cards are a huge roadblock to financial security, so they should not be used to make purchases unless you can pay off the card in the short term.
Short term repayments can help your credit score, which can increase your chances of getting low-interest credit cards. Some credit cards offer no interest for up to a year, allowing you to pay off your balance before interest accumulates thereby saving you money.
Start a Business
Starting a business is a common method of making money. Today, there are more ways to generate income through businesses. Many brick and mortar stores have ceded to online stores. Online stores offer convenience and accessibility, with less cash and constraints.
Plan Retirement
Start planning your long term goal for retirement now. It might seem far away goal, but it should become a part of your everyday life. The sooner it becomes a habit, and you can put away money each month for retirement.
There are no set saving guidelines for retirement, but a dependable approach includes multiple amounts of your salary at different ages. A good rule of thumb, you should have the following:
- Two times your salary by 35
- Six times your salary by 50
- Ten times your salary by 60
The above tip can help you reach your financial goal, ensure financial security and financial freedom.
