The term financial literacy has been emerging in recent years. The world is changing rapidly, old government systems are transforming and people around the world want to secure their future in different ways. The recession and inflation have been increasing and it can feel like a huge block for your financial goals. Saving money is something everyone should try to achieve monthly.
It is essential to learn new tools to adapt to this changing world. Creating financial literacy and financial goals can help you to live a stress free life. There is an endless discussion about if money brings happiness. Money can bring happens if you know how to handle it right. You can provide yourself with all the necessary means to live a comfortable life. Let’s start from scratch and learn what it means: financial literacy and financial goals.
What is financial literacy?
Financial literacy means the ability to understand and use various financial skills effectively, including personal financial management, budgeting, and saving. In other words financial literacy makes individuals become self-sufficient, so that financial stability can be accomplished.
If you understand financial literacy then it will help you to set your financial goals more realistically. Also it supports your financial well being. You can improve your financial literacy by reading books, listening to podcasts, subscribing to financial content, or talking to a financial professional. There are many free resources available on the internet.
What is financial health?
Once you learn about financial literacy you will understand better what financial health is. Financial health is a term used to describe one’s relationship with money. There are different aspects of financial health. These can be your spending habits, your saving habits, how much you’re putting aside for retirement or how stable you are financially.
Financial health can be measured through answering some questions about yourself. If you want to know about your financial health you can start asking some of these questions to yourself:
How prepared are you for unexpected events?
Do you have an emergency fund?
Do you have the things you need in life? How about the things you want?
Do you feel you’re on track to meet your long-term goal?
Or if you have debt and want to deepen your understanding you can ask yourself:
How much debt are you in?
What percent of your debt would you consider high-interest, such as credit cards?
Have you started saving for your retirement?
Answering this question honestly will help you to understand your financial health. If you find yourself in a situation far away from where you want to be, try not to panic. Because you can always start from somewhere.
What is a financial goal?
Setting goals in every area of your life is helpful for you to achieve the life standards that you want to live by. A financial goal might be any type of financial plan you have for your financial situation. These can be short term, mid term or long term plans. A short term financial goal may be saving some money at the end of each month. A long term goal may be buying a house, car or any other investment for retirement.
Short- and mid-term financial goals might look like:
Saving up an emergency fund at least up to 3 months
Saving for a summer or winter vacation
Paying for books for an upcoming semester of school
Paying for your kids school expenses
Buying a new kitchen appliance or renovation
Saving for an engagement ring
Putting down a deposit on an apartment lease
Saving for upcoming medical expenses
Buying birthday or Christmas gifts
Saving a house down-payment
Long-term financial goals might look like:
Buying a house with cash
Buying a new car with cash
Paying for your kid’s college in cash
Saving for a comfortable retirement
Launching a new business
Traveling for several months at a time
How to start setting the right financial goals for you?
But in order to start, you will need to set up some financial goals. What do you want to achieve? How long will it take? What are the steps to achieving it? Financial goals are very personal choices. To start you can try to look for your motivations, values and dreams for the future. We all know that financial education starts in the family, probably you have inherited the way of handling money from your parents. Think about this and try to be aware of your spending habits.
Sit down and think about the impact of your spending habits on your finances. Once you have a clear picture of what is going on then you can start to set some realistic financial goals for yourself. You can be specific as much as you want. 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.
Do you have debts? If you do have debts, we recommend you to start from clearing your debts to create a clean slate. You can set small goals to start paying your debts with small amounts every month. It is also important to set deadlines for your goals.
Creating an emergency fund might be another important short term goal to start focusing on your long term financial goals. We are all humans and we compare ourselves all the time. However it is a good idea to create your own goal without comparing yourself to others. At the end of the day everyone is on their unique journey. When you are clear about why you set your financial goal then it is going to be easy to achieve your goal whether it is short term or long term goal.
It is a good idea to write down your financial goals and keep them somewhere you can see daily. This will help you to keep track of your goals.
Let’s talk about these steps in more detail:
1- Find your inspiration
The first thing you have to do is get inspired!
Maybe you’re dreaming of that holiday to Maldives or you’re saving for your dream home. How about buying that car you have been waiting for years? Or simply you just want to live a stress free life. Whatever it is you’ll need to find what pumps you about your finances. It is important to have your own personal goals. Setting intentions is the first step for you to start taking action toward your goals. You can find many tips online about budgeting.
2- Examine your situation
Financial health is important as much as your own health. It might be a good idea to have a look at your finances and assess 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. At the beginning It might be a good idea to create a budget sheet where you take notes of your income and expenses monthly. When you have a clear picture of your situation, it can help to set the right financial goals for yourself.
3- Build up an emergency fund.
Building an emergency fund can help you feel very safe while you are taking important decisions in life. Also it is good to be prepared for rainy days. Maybe suddenly you want to change your career, when you have an emergency fund you can take your steps with more confidence. Or imagine that some health issue comes up, you can use your emergency fund for the treatment.
Even if nothing emergent comes up in your life, you might feel more secure when you have a little bit of savings. We recommend that you save at least 3 to 6 months of your monthly expenses in your emergency fund.
4- Think SMART
Like we have mentioned above the word 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.
5- 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. You can try journaling exercises. Or simply sit down and make one list about your goals. Be mindful about your goals. It is always better to go with the flow. Of course include your big dreams however starting with baby steps will give you ease. Because each time you accomplish one of your goals you will feel better and keep your motivation.
Short-term goals: reachable within six months to one year
Long term goals: reachable within one to five years
6- Create a budget for yourself and for your family
If you already have a budget then congratulations on that because this is fundamental. If you don’t have a budget yet don’t worry, it is never too late to start. After evaluating your situation it will be very easy to create a realistic budget. Think about your own or your family’s basic expenses. Write them down and think about where you can make adjustments. We are not talking about lowering your standard of living, however there might be some points that you can alternate and save huge amounts of money.
7- 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. You can take notes of your daily or weekly expenses. Open a savings account in your bank and start adding a small amount of money every week. Some digital banks offer recurring savings which means you don’t need to think about your savings. If you set up this feature, every week or month automatically some of your income will be added to your savings account.
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!
8- Look for benefits and rewards
Saving is not only about putting some of your income aside. You can start with cutting unnecessary expenses. Check your monthly subscriptions on your phone. Try to use some promo codes or cashbacks that are offered by your financial service provider.
Especially if you are into online shopping, you will find a lot of campaigns available for you. You can try to join loyalty programs where you collect points. You can get huge discounts with loyalty points not only while you are shopping but also when you are travelling.
As the Jeton family we have a huge empathy for our users. Jeton app interface has been designed for you to be able to manage your financial health. Jeton offers several features to support its users on this journey. From cashback offers to saving accounts, Jeton will enable you to start taking action on achieving your financial goals.
Visit Jeton today and register!
