Making and saving money has always been at the forefront of our society’s lives. While it’s easy to spend the money you’ve just made, there are more substantial and greater goals that many people have in their lives that require strategic and early-on planning. It’s never too early to set a budget for your financial goals. The sooner you have a grasp of how your money comes in and flows out, the sooner you’ll be prepared to take hold of your financial reins and hit those financial goals you’ve been dreaming of. If you’re just starting out with your finances, here are the top five money management tips to consider when setting financial goals.
Evaluate Your Situation
Before you can even make any financial goals, you need to assess where you are in all areas. Be honest with yourself and try to be as specific as possible as any vagueness will not contribute to figuring out your next steps and your money goals. Know the exact numbers you have, the numbers you need, and the numbers where you want to be.
Pay off Debts
The first goal in your financial journey should be to pay off all personal debts. To build a stable family and to create a good credit score, you’ll want to make sure that you dedicate a certain percentage of your monthly income to paying off your debts. Once you are not drowning in debts, you can begin to save more in the future. With your debts paid, you’ll be able to save for other financial goals like buying a house or saving for retirement.
Make a Budget and Stick to It
When you set short and long-term goals, the best way to achieve them in a consistent manner is to set up a budget. But, the important part about setting a budget is actually following it and not straying away from it. With your main goal in mind, make sure you prioritize it and make sure it’s the last thing to sway on your budget. Be honest about your needs for luxury shopping or unnecessary impulse buys, as they do not contribute to your long-term goals in a positive manner.
There are a lot of numbers when it comes to budgeting and semi financial goals. There’s also a multitude of resources to help you stay organized if there’s too much for you to keep track of. Common ways of tracking include using Excel sheets, written documents, or specific finance tracking apps like Mint, Goodbudget, or Personal Capital. Depending on your bank, they may even have their own budgeting and spending platform integrated into their online dashboard or app.
Establish an Emergency Fund
If CO-VID has taught Americans anything about their financial state is that creating an emergency fund and saving for a very long and rainy day is something that should not be overlooked. Whether it’s five dollars a day or five dollars a month, it’s a great idea to set aside recurring income for any unseen events, circumstances, or necessary situations that you might need a bit of extra cash for. A rule of thumb is having about 3 to 6 months of income saved as an emergency fund.
With these financial tips, you’ll be able to have a better idea of your own money habits. Using these tips will set you up for a successful financial savings future and accomplishing financial goals.