Setting goals is very common this time of year. Lose weight. Get healthy. Book a holiday. Maybe even put a little aside for your savings. We advocate including financial goals when doing you sit down to create your plan for the coming year – whether it be on a personal or professional level – your finances play a huge role in everything you, so give them a little love too.
Why set financial goals?
Many people don’t include financial goals when they set their intentions for the year. Sometimes it’s because we have skeletons in the closet and we are too scared to open the door and face. Other times you might think, well I’m doing ok, we’re scraping by.
But there’s some data we’d like to share and it’s a little scary (scarier than the skeleton).
1 in 3 Australians is experiencing financial stress. This means around 30% of Aussies are struggling to pay their bills, are maybe living pay check to pay check and feeling negative about their finances. The impacts of financial stress are far reaching your relationships and personal wellbeing. One of the leading causes of relationship breakdowns is money related.
Which is why we think it’s really important for you to take some time to set your financial goals, and ensure you’re working on your financial wellness, just as you would your health or mental wellbeing.
Setting your financial goal
The first step is to look at what you want to achieve (i.e. buy a house) or whether you have some debt that you really want to pay off (like your personal loan) this will likely determine what you focus on first. We use SMART goals when we set our goals. Why? Because it works.
One example we’ll go through is to save money. To make this a SMART goal we would add a time frame, attach a dollar value and ensure it’s within our means to achieve. A SMART savings goal might look like: I’m going to save $10,000 this year, by saving $200 per week.
Or you might like to follow the advice of some very financially savvy people and use the 50/30/20 rule which is to save 20% of your take-home pay.
Creating a strategic plan to achieve your goals
Once you’ve identified what your goal is, your next step is to work out how you are going achieve it and what actions you need to take. If you want to save $200 per week, then you might need to do things like set up a separate savings account or term deposit or set up a direct debit for $200 from your pay each week. If you are no good at saving, then make sure it’s an account you can’t easily access.
You might also need to reduce your outgoings or expenses. We’re not advocating you deprive yourself of all life’s pleasures. What we are saying is that you find where in your budget you can make some compromises in aid of achieving those goals.
How to hold yourself accountable
Whether you tell someone your goals (we like the term accountability partner) and give them access to your savings tracker (this might be a bit extreme but it certainly helps if you lack discipline. Whatever method you choose it’s important you don’t just set and forget.
Take some time once a week or month to review where your goal is at. This does two things; one is you are aware of how you are tracking against your target. Number two, seeing your savings grow or your debt dropping is motivating. Just like losing weight, you get a buzz of excitement when you can visually see all your hard work paying off.
Keep at it
Like any goal, you’re probably going to have great leaps forward and some stumbles along the way. But stick to your goal and make sure you keep checking in on yourself. As your circumstances change you may find your goals change too.
And once you’ve achieved your first goal, move on to the next!
For some great apps and resources on savings and property, check out this article on our blog.
Article by Twosix Workplace Wellness Partner Entourage Finance – Ask us about our NEW Financial Wellness Workshop for your Workplace
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