Your New Year’s Resolution might have been to be on top of your savings game and to be more financially stable.
With the first quarter of the year coming to a close, it’s a good time to check-in and observes how well you’ve been keeping up your end of the bargain.
Setting financial goals can be difficult, but it’s one of the key steps you can take toward climbing the ladder of success. If you struggle financially by not having any savings, even though you might be putting in long hours, you might be setting yourself up for precarious times.
Or on the flip side, you could be setting vague goals for yourself, like wanting to learn how to manage your finances better without outlining specific ways you plan to do so.
A lack of direction in terms of looking after your financial health can mean greater financial risk.This has the potential to turn into a major setback for you, especially in atime of need. This is not just to imply that you should know exactly where you should spend every single penny, but also entails keeping in mind the frequent lifestyle changes we all experience.
Fast forward to thirty years later, it’s 2050.
At this point in your life, you most likely want to retire and spend your life in a house you own with your loved one. Do you have a pension plan that provides a steady income and helps you cover daily expenses?
Imagine a time in the future when your children (if you decide to have any) are getting married. Will you be able to help them out financially without going broke? Or do you want to invest in yourself and start a business you’re passionate about? Do you have a secure fund that can finance your start-up?
It’s in 2030. Where do you stand? Do you want to be married and expand your family? How many dependents do you have? Can you afford a vacation each year? Can you provide a good quality of life you envisioned for yourself and your family?
Projecting your future can be scary, but planning for it is the parachute you need to stay afloat and make sure you don’t hit the ground. Most of these scenarios are also subject to the economic times we live in and market predictions.
There will be ups and downs and highs and lows but, with the right goals, you will have the basic structure that can help you stride with confidence into achieving all that you want in life. The right time to start is the present moment because that’s the ultimate reality you’re experiencing in real-time. Start now and stay consistent!
Here are some financial goals to begin with for a range of scenarios. You can begin to grab the reins in 2023.
This is one of the biggest financial burdens you can experience, and one that you should consistently avoid the most. Draw up a plan which helps you become debt-free as soon as possible and don’t deter your debt payments at all.
The longer you delay paying off your debt, the higher the interest rates can get. This means you’re left with a greater amount of money to pay off in the long run.
Assess the kind of debt you have. If it’s credit card debt, make sure that you never delay the payments as this can impact your credit score. You want to build good credit so you can get lower interest rates on other loans you take out in the future, such as for buying or remodeling your home.
Student loan debt rates are soaring and, while these have the lowest interest rates, this can hold you back from pursuing other dreams and goals, such as retiring sooner or pursuing further education.
Your retirement fund depends on a number of factors, including the standard of living you envision for yourself, your foreseeable medical needs, and the likelihood of you receiving a pension.
Have a discussion with a professional to set the most realistic goal for the amount of money you should save for retirement.
A general rule of thumb is to be able to spend at least 70% minimum of your final income when you retire.
Budgeting strategies are dependent on individual personalities and spending lifestyles. If you generally struggle with budgeting, you need to devise a strategy that will be most effective for you.
You can try different apps to help you track your spending and work on increasing your income streams. This way, you can dedicate one entirely to your savings while you budget your spending income. Think about some hobbies that you excel at and can monetize.
You can also take up odd jobs if your hours allow it. Only attempt to do this if you feel like you can sustain this lifestyle without it taking a toll on your physical health. Make sure you take care of your emotional needs, as this can be an exhausting lifestyle.
The general rule of thumb is to follow a 50:30:20 ratio where you save 20% of your income and spend 30% on doing things you like. You can also switch the two depending on your needs. The larger chunk is dedicated to paying off debt and bills.
Yet again, it’s important to come up with a concrete figure in your head. Set a goal to increase your savings by a certain percentage. If you want to increase your savings by 25% by the end of the year, you can plan to spread the amount over the months and aim to increase thoroughly 2% each year.
Make sure you adjust the amount according to your income and the purpose of your savings. However, this approach is meant to soften the blow and make it easier for you to envision the spending without feeling like it’s too much of a pinch.
Remember that with a little persistence and perseverance, you can be where you want to be next year!
For more information, explore the Tao Academy.