Setting and reaching your financial goals probably seems like an overwhelming task. If you break down large financial goals into smaller, accessible goals, you’ll have an easier time achieving them. Follow these five simple steps to reaching your financial objectives.
Step One: To set and achieve financial goals, you must understand your finances. This is the most significant piece of financial success. To comprehend your finances you must know your FICO score. This three digit number is your financial footprint that will affect car loans, home loans, and credit card applications. Go to www.myfico.com to obtain your score.
After you understand your FICO score, you need to know how you spend your money. Take one week to jot down all of your purchases and look at the amount of money that is coming in as opposed to the amount that is being spent. Are you increasing or decreasing your amount of debt?
Step Two: Write down your financial goals with a realistic amount of time it will take to reach each goal. Decide which goal you want to obtain first. You won’t be able to tackle all goals at the same time, and you don’t want to set unachievable goals.
Step Three: Look at the time frame for your prioritized goal. If it’s a long-term goal, you need to write down smaller goals to reach the long-term goal. For example, your long-term goal may be that you want to save three thousand dollars in one year in case you get laid off.
The smaller goals to reach this long-term goal would be to save two-hundred and fifty dollars each month. The person setting this goal would need to look at their spending habits and find places to save money. Maybe that person would cut their dining out to three times a month instead of eight times a month. Or maybe the person would spend one hundred dollars on clothes instead of three hundred and fifty dollars on clothes.
Step Four: Evaluate yourself. Depending on your short-term goals, at the end of each day, week, or month you should evaluate your progress. If you didn’t reach your short-term goal, you should find out where the failure occurred. Did you eat out more during the month of December due to the holidays? Did you spend more on personal expenses, because you threw a baby shower for your sister?
You’re not going to always reach each goal. Don’t give up if you don’t succeed the first time. See if you can make up for the goal that you didn’t reach or reassess your long-term goal. Add a few more months to make your long-term goal more realistic.
Step Five: Success. When you reach your goal, take time to evaluate the process that you went through to succeed. Give yourself credit for making changes in your finances to better yourself and decide how you can apply your motivation and success to other financial goals.
Set the next financial goal and complete the same five steps.