If you have big plans for the future, money is likely a big part of them. Setting your financial goals is the easy bit – actually achieving them is something that can be much more difficult. Here’s how to do both.
Start with where you are now
What’s the best place to start? Exactly where you are. There’s no point looking to the future until you understand how you use your money in the present.
Assess your income, outgoings, debt levels and savings to get a well-rounded picture of your financial situation.
Consider your long-term ambitions
Now, you can more realistically visualise where you want to be in the future. This very much depends on your individual circumstances.
If you’re in substantial debt, becoming debt-free might be your long-term ambition. If you’re financially stable, growing your wealth over time may be your priority. Set the goalposts and start planning.
Set SMART financial goals for the short to medium-term
It’s the small things done consistently that will help you reach your goals. Work back from your long-term ambitions to determine what you need to do over the next weeks, months and years.
SMART stands for Specific, Measurable, Achievable, Relevant and Time-bound. Setting goals with this framework ensures that you can work towards realistic objectives that will drive meaningful change.
For example, if you’re looking to save a house deposit to get on the property ladder, you might want to save £15,000 (specific, measurable and relevant) over the next 3 years (achievable and time-bound). This means £5,000 per year equalling around £420 per month.
With manageable steps laid out, you can then start to work out how you’ll hit each milestone.
Explore your saving and investment options
Depending on your financial goals, you may need to rely on saving or investing. These are the processes that will drive you towards your ambitions.
If saving is your priority, high-interest savings accounts are usually best to add that little bit extra on top of your efforts. Consider how accessible you want your funds to be – you can earn more interest by choosing a fixed-rate account, but you may have restricted withdrawals.
If you’re looking to grow your money over time, investing is the way to go. Shares, property and other investments such as stock trading help to make your money work for you.
It’s important to note that there are risks to trading and you may lose money. But choosing the right investments and managing risk should help your funds grow faster than if they were in savings.
Track your progress and adjust where necessary
As with any goal, it’s important to monitor your progress and adjust things where necessary.
You’ll undoubtedly have good and bad days, weeks and months. However, evaluating the situation and tailoring your approach should go a long way to helping you achieve consistent progress.