We have made it to the year 2020 along with billions of other people around the world to welcome in the new year. The start of a new year is a time for reflection, new habits, and positive affirmations. All of this feels all the more important when the new year also marks the beginning of a new decade.
Before setting yourself goals for the new year, have a think about how they feed into your long term goals as well. People who set themselves short term goals, as well as long term goals, are more likely to find themselves reaching their long term goals. Short term goals are usually one to five years and may include buying a car, putting a deposit on a home, or paying for your dream wedding. A medium-term goal is between five and twenty years and can be paying off a mortgage or your college fees. Your long term goals may reach as far as twenty years into the future. They will likely include things like your retirement plan, saving for your child's wedding, and may even go as far as thinking about the future of your grandchildren.
Consider separating your goals into categories; perhaps you have relationship, financial, personal, and professional goals that you want to work towards. Having different goals to work towards will make it easier to achieve success in these different areas of your life.
Your goals will be different depending on where you are in your life. If you have just left college, you probably won't be thinking about retirement just yet. Equally, if you are at retirement age, your goals will look very different from the goals you had as an adolescent.
When it comes to setting yourself financial goals, you need to create achievable milestones that will keep you on track in the long term. If you make yourself challenging unattainable goals, you may give up far sooner than if you set yourself realistic goals. Of course, don't be afraid to think big and have big dreams to work towards, that will both challenge you and provide you with the motivation you need to achieve big things for your life.
There are several basic steps you need to do before you st your financial goals. You need to determine your current financial situation with regard to your current income, savings, living expenses, and of course, debts. Calculating your loan payments will help keep you on top of your loans and any outstanding debts so that you can work towards your savings goals.
Write Down Your Goals
Once you have your current finances in order and are aware of your current financial status, then you can begin to plan. It may sound obvious, but writing down your goals will help you physically see what you want to achieve and the steps needed to get there. Putting your goals somewhere that you can see every day is a great way to remind yourself and keep you focused.
Be specific with the goals you have in mind so that they do not just end up being vague dreams. In a similar vein, give yourself a specific time frame so that you know exactly how long you have to work towards a goal, both short term, and long term. Don't be afraid to review your goals from time to time, and see if you need to change some of your short-term goals to help you reach a long term goal. Life is unpredictable, and as such, will require you to adapt to the changes you may face in your finances. Don't be put off by life events that may put you back a few steps in your plan. Things that you can't control, such as illness and divorce, for example, may lead to a significant change in your lifestyle and require you to adapt to the changes in your circumstances and be able to consider all possible outcomes and alternatives. Unexpected expenses will also inevitably crop up, and whether it is a new car, a new boiler, or flood damage that isn't covered by your insurance provider, these are setbacks that you will inevitably have at some point in your life.
Emergency Fund
Having an emergency fund for unexpected occasions in one's life will help with the financial aspect and give you some peace of mind when you are experiencing difficulties. It is advisable to keep an emergency fund separate to your current or savings account so that you don't dip into it unless necessary. It is worth having around six months worth of salary in your emergency fund, in order to cover living expenses for this duration should something happen. Put aside small amounts of money each month or couple of months until you reach this goal. Everyone's emergency fund will look a little different. The idea is that you start saving a little bit as soon as you are able, so it doesn't feel like an additional burden to your income.
Retirement plan
Financial freedom or retirement is something that we all work towards. Some people may choose to retire earlier, while others may have to work a little longer to build a stable retirement fund for themselves. Financial experts suggest saving around ten percent of your income for your retirement, and if that sounds like too much, then working towards incrementally increasing your pension contribution each year is a good alternative. Having a pension savings plan, with regular increases, is one of the best ways that you can ensure you have a safety net when you retire. The future is unknown, and even if your retirement is a long way off, you never know what age you will truly be able to retire, as national retirement ages change regularly. If you don't want to work when you are well into old age, prepare a retirement plan that enables you to have peace of mind for your future.
Reward yourself
When thinking of the big picture, it can be easy to forget the smaller pleasure along the way. Working hard to build the future you deserve is all well and good, but if you are not enjoying your present, then life can feel a little unrewarding. Allow yourself to celebrate your achievements, whether that is a financial milestone reached, or a professional or personal achievement. A few rewards along your savings journey can make saving feel easier in the long run. Like anything too restrictive, it is easier to fall off the wagon if you do not allow yourself a few treats now and again. If you find that you have exceeded your saving goals one month, or over the period of a year, you may want to reward yourself for your commitment. This reward doesn't have to be anything excessive, and remember it shouldn't set you back from your long term goals, but if you are in a position to afford an extra holiday or splurge on a new car then great! You may only be able to treat yourself to a nice meal, or a bottle of champagne, which is still a nice way to celebrate and reward yourself.
Saving for property
It is harder than ever for young people to buy property. Potential first-time buyers will have to put aside a great deal of their savings if they want to get on the property ladder. It is increasingly common for family members, usually parents, to help their children get their first home. But not everyone is fortunate enough to have the financial help of their parents.
You need to make sure that you have all the information related to mortgages, loans, and the exact costs of housing. One great way to save and prepare for a mortgage is to live as though you were already paying a mortgage. Putting money aside that would potentially go on a mortgage will get you used to the additional costs of a mortgage while you save for this future.
Prioritize your goals
You have created a list, you think you know how to achieve your goals, and then several months or years down the line you realize that you have been focusing on some goals more than others. The goals you prioritize mustn't be just the ones that you find most straightforward, but the ones that truly matter to you. Arrange your list in order of priority, and tick of your goals as you achieve them or as you reach certain milestones. Evaluate what your essential goals are and ensure that the crucial objectives are higher up the list than the ones that would be a plus, but you do not consider necessary. Ask yourself what your most important goal is, and have that at the forefront of your savings plan.
Ten years feels like a long time, but in reality, ten years can go by in the blink of an eye. Making sure you go into this decade with your priorities in place, and a realistic and achievable saving plan will also set you up for the following decade, and your future.
