Many of us are always committed to improving our financial situation with a view of either achieving or maintaining financial security. Achieving financial security is an admirable goal, but only a handful of people know where to start. If you’re thinking or starting to take steps towards achieving financial security, here are top tips you should consider when setting financial goals. If you don’t have any goals yet for saving money read our article on The Importance of Saving Money For The Future for different reasons to save money.
Personal Financial Audit: Assess Where You Are
Setting financial goals is very important. However, before you start thinking about setting any goals, it’s crucial that you know where you currently are. The first step is conducting a personal financial audit. Look through your savings, debts, and investments. Assessing your financial status will enable you to gain knowledge which can help you decide whether you should set long-term or short-term financial goals. It will allow you to set realistic goals based on your financial status.
Set Yourself a Realistic Budget and Stick to It
One of the best things you can do to achieve your financial goals is to set a budget. A budget is simply a plan for your money that tells you the amount of money you are spending against your income. Having a budget can help you stay disciplined as it enables you to track your money which in turn reduces overspending. Having a budget is crucial because it allows you to plan for your regular expenses. The budget shows what expenses are going out each month and the amount of money coming in as well.
Personally, my budget is done monthly and reviewed at least once a week. This helps me to keep track of how much I’m spending daily and how much I have left to spend. It also enables me to make some adjustments on my budget if i overspend. Having a plan for your money is very important as it gives you control when managing your finances which leads to better financial decisions.
Make Your Budget Realistic and Achievable
Additionally, your budget should be realistic and achievable. Your budget should start with a comprehensive look at your income and determine the best way to utilise that income on a monthly, weekly or daily basis. There is no point of making goals that aren’t possible to achieve. When it comes to saving money, I have realised that it’s better to start out slow and stay within your ability. You should try to save as much as you can without compromising too much. You should also ensure that the money you set for your living costs (food, rent and utilities) is around what you usually pay to ensure that you are living comfortably. If you try to do too much too soon, you are going to only set yourself up for disappointment if you fail to achieve your goals. Consequently, you’ll be more likely to give up prematurely. Set yourself small, reachable goals during the transitional period and review the goals later to suit your needs. Once you get the hang of it, you can then start increasing the amount you save each month based on your income vs your living costs.
Watch Your Finance Closely
Setting budgets and goals are great, but your efforts will most likely be in vain if you do not have a plan to stay on track. you will need to develop good organisation skills as it is very crucial to properly manage your income as well as meeting your financial goals. When it comes to your personal budget, the more organised you are the better. There are several tools and budgeting apps out there that you can utilise to help you remain on track.
Use Budgeting Apps
Personally I use a combination of two budgeting apps which is Budget Book Pro and Yolt. Budget Book Pro is useful because it does not require any personal information to use the app, you can add in all your transactions manually. Its an easy income and spending management tool: you are able keep an eye on your money in self-created categories, you can create monthly recurring bookings, use the report page to see trends and a graphical overview of your finances. You are also able to synchronise several installations of the app on different devices via Google Drive if you are on Android or iCloud if you are on IOS. If you are someone who is paranoid about security by giving third party app access to your bank account you should consider using this app as doesn’t require you to connect it to your bank.
With Yolt you can sync your accounts in one view, see your spending clearly and do more with easy budgeting. It automatically categorises your spending and gives you different cards based on your spending habits. Yolt is available on both IOS and Android. I sorely use Yolt for my credit card because I mostly use my credit for grocery shopping, travel passes as well as large purchases. More traditional tools such as Excel or a spending notebook to create budgets, manage money and pay bills all in one place can also be utilised if you don’t want to use budgeting apps on a mobile device.
Educate Yourself to Gain Financial Knowledge
Without knowing resources available out there to help you save its going to be hard to achieve your financial goals. You should do your research to understand how money works. Read some personal finance books or subscribe to a personal finance blog. Use comparison sites every time you want to make a big purchase or change your credit card, increase overdraft and bank current or savings account to get the best interest rates available on the market