A couple weeks ago we focused on the reality of needing a budget, which isn’t exactly the most enthralling topic, I know. But it is a necessary step to achieving your ultimate financial goals.
What are your financial goals? Do you have any? Are they even important?
Why yes, yes they are!
Financial goals are a way to make sure you get exactly what you want out of life and also give you the framework for a road map to achieving your dreams.
I’ve completed many of my own financial goals in the past couple of years and it has been the result of defining my goals and figuring out a path to completion. Not exactly a mind-blowing concept, but budgeting and savings accounts was what worked for me! It worked once, so I continued to use that same method and saw goal after goal get checked off my list.
I paid off credit card debt I’d accumulated in college by avoiding eating out with friends, opting to instead host dinner at my apartment, and pocketing the savings.
I lived in the UK for 6 months and traveled around Europe for 2 months by following a budget during college and saving as much money as possible from my retail supervisor job. I also became a bit of an extreme couponer, regularly saving $50-60 a shopping trip.
I bought myself my first ever new car, a 2014 Jeep Cherokee, with savings from my first post-college job and an amazingly low interest rate on my car loan, thanks to a credit score around the 800 mark.
I became a homeowner just 18 months after college graduation thanks to my budget, smart saving habits and taking advantage of a government program for first time home buyers in my state.
I traveled back to Europe for 2.5 weeks to spend time in the UK and also see 3 new countries (Latvia, Estonia and Norway) while still making all my mortgage payments on time. (UPDATE! I’ve spent 4.5 weeks in Europe and added Poland, Hungary and Denmark to the country list.)
The only one of those goals that was not clearly defined from the start is the time I spent in the UK and Europe. That opportunity appeared somewhat out of thin air, but had I not been scrupulously saving during college (despite not having any particular goal at the time), I never would have been able to take advantage of it. By being realistic, responsible and holding myself accountable on a daily basis, I’ve actually managed to experience more of the world than most people in their 20s.
1. Define Your Goal
No matter what your goal is, it’s important to make sure you have it defined as much as possible. Look back at the budget you created last week. What goals did you list out?
Even if your goal is simply to have funds available for spontaneity, put some sort of benchmark around it, such as, having $2000 set aside in that account in 6 months time. With defined metrics you’re much more likely to hold yourself accountable!
However, make sure you’re being realistic. When setting a new goal, I always start by doing the math.
$2000/6 months= $333.33
In order to achieve the example goal above, you would need to save $333.33/month.
Can you carve over $300 in expenses out of your budget each month? If yes, great! If not, you should reevaluate either your goal’s completion date or target dollar amount.
Goals are great because they make you work harder and help you get what you want in life, but goals that are way too lofty tend to have the opposite effect. Unachievable goals almost always result in feeling over matched and ultimately giving up.