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Many people share the desire to establish financial security. However, making that happen or figuring out how to get there is a challenge. Even if there is a well-defined vision, but no clearly defined path, you’ll likely fall back to where you started—that is, attempting to figure things out.
Financial freedom is a great thing, but it comes with a big responsibility. First, you must be honest about who you are and what you believe in.
In this post, I’ll lead you through the process of setting and attaining your own personal financial goals.
1. Know your goals
One of the first steps in making a list of your goals is figuring out where you want to go. How likely are you to fulfill your goals if you only have a vague sense of what they are?
The first question you must ask yourself is, “Financially, where do I want to be?” “What kind of life would I like to lead?”
Knowing where you are headed can spearhead your financial journey.
2. Make a list of your financial goals
According to a study, those who write down their goals are around 40% more successful than those who do not write them down.
Making a list doesn’t entail just writing it down. It encompasses the entire planning itself. Goals must be SMART if they are to be successful. SMART goal-setting is a tried-and-true method for increasing your chances of accomplishment.
It is pointless to put down the goal of increasing your retirement savings but not specifying how you intend to go about it. Hence, when you employ the SMART method, you are prompted to go deeper into the matter.
For a goal to be successful and effective, it must meet the following criteria:
- The goal must be SPECIFIC
- It must be MEASURABLE
- It must be ACHIEVABLE
- The goal must be REALISTIC
- It should be TIME-BASED
3. Compose a plan that you can follow
Now that the SMART goals have been established, you need to set yourself up for success by breaking down your goals into smaller, more manageable tasks.
Having massive goals can be intimidating. For example, let’s say you took multiple projects at once, even though your capacity can only handle two projects at once. This may be overwhelming at first, but you start to learn how to manage your time effectively over time. As with big goals, you need to start with small tasks first. Then, prioritize each one on their level of achievability.
A good place to start your plan is by establishing your income and cash flow. Managing your finances can help you allocate funds for your SMART goals. First, ask yourself, what is your monthly income? How much money do you spend each month?
Creating a budget increases your chances of reaching your goals since it allows you to adapt and modify your plan as needed.
4. Spend money at your own discretion
Getting started on your financial goals will elicit feelings of excitement and motivation. You’ll be willing to make major financial sacrifices and do whatever it takes to get there quickly.
However, the excitement may start to wear off, especially when your significant sacrifices aren’t paying off. This is a common problem among the general population.
People tend to second-guess their financial choices, which can impact how they view their financial path. Unfortunately, there is no one-size-fits-all formula, but what you can do is control your expenses. Your spending habits should be flexible enough to allow you to save money while still having fun and enjoying yourself.
It’s also possible to implement a system of incentives for reaching a specified monetary milestone. For example, say you want to save $10,000 by the end of the year, and you reward yourself for each month you save a percentage of that goal.
5. Increase your disposable income
What Is Disposable Income?
Disposable income can be defined as the sum of all personal income minus the current income taxes.
Making a decision to increase your disposable income is as simple as getting out of bed in the morning and having a spark of motivation to change your life. One proven technique is to cut down on unnecessary expenses.
Websites such as Sampler, offer customized samples based on your preferences and deliver them directly to your door. People who want to avoid impulsive purchases of products that may not meet their standards may benefit from this feature.
Another way of increasing your disposable income is to increase your profits. But it should spur action. Consider asking for a raise at work, starting a side hustle, business, organizing your home, and selling excess belongings on Poshmark, Craigslist, or eBay.
6. Become a lifelong learner
The more you learn about finances, the better you will become. But for those who are just starting out on their journey, it’s never too late to improve your financial knowledge.
Like the majority of CEOs, you can read at least one financial book per month or at least 50 books in a year on financial topics. Experiences can also be a means of acquiring new knowledge. That being said, problems will arise at some point in time. However, it is important to realize that failures are part of the process.
Making mistakes helps you learn and improve your skills. Do your research and learn to figure out what works best for you and what you need to work on.
7. Seek an accountability partner and expand your network
Share your financial goals with people who have the same goal as you do. This is just as important as setting goals and working hard towards them. Surround yourself with like-minded individuals who understand your goals to create a solid support system.
For a moment, consider the people you want to keep company. Your financial success depends on your ability to surround yourself with the appropriate kind of support and encouragement. These people can gently guide you back on course when you get off track.
If you wish to take the first step toward achievement and financial independence, you can follow the above advice and guidelines.
You may also like: 10 Unconventional Financial Goals Which We Came Across From Investors
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