Saving money is something everyone should try to achieve monthly.
But in order to start, you will need to set up some financial goals. What is you want to achieve? How long will it take? What are the steps to achieving it?
Once you’ve identified what’s important to you, you need to figure out what is achievable in the short, mid-range and long term; develop a SMART (Specific, Measurable, Achievable, Relevant and Timely) strategy and a tight budget to achieve it; start saving and constantly monitor your success.
That’s a lot, but it’ also achievable. Here’s how.
1. Find your inspiration
The first thing you have to do is get inspired!
Maybe you’re dreaming for that holiday to Maldives or you’re saving for your dream home. Whatever it is you’ll need to find what pumps you about your finances.
2. Examine your situation
It might be a good idea to have a look at your finances and asses the situation. Start by assessing your income, income tax situation, budget and net worth. Check your financial health score to get a quick overview. The higher the score, the more flexibility you have to set goals. A lower score signals that certain goals need attention.
3. Think SMART
SMART is an acronym which stands for specific, measurable, attainable, realistic, and timely. SMART goal-setting turns vague goals into concrete, specific plans. Instead of saying, “I want to pay off my debt,” or “I want to save money for the future” your goals are reshaped into tangible objectives such as, “I will pay off £5,000 in credit card debt in 2021” and “I will save £1,000 for a family vacation at Christmas.” Suddenly, broad-stroke hopes are set into motion.
Above all else, the purpose of SMART goals is to make you think about your goals before you sign off on them. If you dive right into a goal without some forethought, some planning, and some organization, you’re basically dooming yourself to fail right off the bat. Very few goals are perfect as soon as you think of them. They need and deserve some degree of refinement, and the idea of SMART is to give you some basic steps to refine those goals.
4. Write your financial goals down
Write down or record your vision of financial security.
Create both short-term and long-term goals. People who write down their goals are more successful at achieving them.
Short-term goals: reachable within six months to one year
Long term goals: reachable within one to five years
5. Keep an eye on your progress
Check in with yourself (or your accountability partner) to see how well you’re sticking to your budget. If you can, try to do this at least once a week.
Look at where you’re slipping up most often and come up with solutions. If you’re making progress toward achieving your goals, reward yourself!