What are your financial goals?

Are you well on your way to knocking some of them down? Or is that a problem for future you?

Setting financial goals is an important part of life, just like eating healthy food, exercising and looking after your mental health. When we set financial goals, and our finances are in order and working for us it eliminates a huge stress barrier in our lives. And let’s agree that life is stressful enough without having to worry about finances on top of other stresses!

I was inspired reading P.J. Money at budgets are sexy’s blog A Checklist of 15 Financial Goals to hit and decided I would too, throw together what my own 12 Financial Goals goals and what I would encourage anyone else to aim for!

The key to building wealth is to start early. If you have the capacity to do so, for example if you are debt free and have money to save, you may want to start topping up your Superannuation (401k or equivalent in your home country). There may be tax incentives for you to contribute to your retirement which is a great bonus. Speak to a financial adviser or your retirement fund to determine what is the appropriate investment decision for you.

Remember, Iit’s never too late to start contributing to your retirement, just remember, the sooner you start, the sooner you can benefit from the effects of compound interest!

5. Track your expenses for 1-3 months
If you have never tracked your expenses, you might have no clarity over what you are spending your money on a month to month basis. Knowing what you spend is the first step in controlling any out of control spending.

If you buy everything on a credit or debit card, this is an easy exercise of downloading all your bank statements into one document. Alternatively, if you are a ‘cash is king’ kind of guy or gal, simply keep a notebook handy every time you spend money over a 12 week period and note down what you spent. If 3 months is too prohibitive, at least do the exercise for one month so you get an idea of where your regular spending falls.

6. Create a Zero-Based Budget
Carrying on from the expenses review, one of the most important financial goals you should now tackle is to create a Zero Based Budget so you can see if you are living within your means and what you are earning Vs. what you are spending. It’s important when planning for your financial future that you know where your finances are at this moment so you can start making decisions about your finances.

The Zero-Based Budget will give you a snapshot of where your budget is and where you might need to reduce spending, or increase saving. To help you get started, you can grab your free Zero Based Budget Worksheet template.

7. Set up automated Savings Transfers
If you have trouble budgeting and saving money, the easiest way to be successful is to set up automated savings transfers. Taking the physical work out of budgeting and savings and constant decision making out makes it much easier to save. And it is important to always ‘pay yourself first’, that is, save some of your money before you pay your bills or spend money on anything else.

Don’t let saving be an afterthought. Set up a regular savings transfer of whatever you can afford out of each pay cheque. Even if it is just $20 a week it will add up, of course, the more you can save the better. And once you get used to the habit of saving and building that savings muscles, it will become easier and easier to add extra money to that regular savings transfer and build up your savings faster.

Don’t forget to put your savings somewhere you won’t be tempted to touch them like a separate high-interest account. And treat the money like it isn’t yours. The more you ‘detach’ from it the harder it will be to spend unnecessarily and be there when you really need it!

8. Set up your Sinking Fund accounts
If you have never heard of Sinking Funds, never fear, I am going to give you the down-low on them, so they too can change your financial future. In my early 20s I was opening some mail, minding my own business when I was hit with an unexpected $1200 vehicle registration and medical insurance (Greenslip) bill. Ouch!

But the truth is, it wasn’t really that unexpected. You see, this bill came at the same time every year and everyone knows well in advance what date their registration is due, it used to be noted on a little sticker on our window screen at the time. Now we are just expected to memorise it in our head, but still. We know when it is coming up.

Somehow it had completely slipped my mind, lets put it down to being in my early 20s and still figuring out life. And so I had to deplete my entire savings account to pay for these two bills and keep my car on the road (and me in a job!). Which left me with $25 to my name. That was a huge scare and I couldn’t be more thankful that it happened to me in my early 20s as that is when I learnt about the magic of Sinking Funds.

If you want one fail-proof system for managing your finances and bills, and not leaving yourself deciding between buying groceries and getting your car on the road like me all those years ago, set up your Sinking Funds.

Simply make a list of all your non-monthly bills or expenses, anything that you can reasonably estimate and get the total for the year. I.e. your annual car insurance bill, clothing, miscellaneous expense etc. And work out the monthly cost.

You want to put that monthly amount away in a separate account where you will pay into each pay check to cover these costs as they come up. Please check out my Sinking Funds post for more information on how to set up your own sinking funds and say goodbye to bill shock forever! 🙂

9. Get your bills direct debited to save you time and automate your finances.
Now that you know your monthly expenses, and have set up your Sinking Fund accounts as mentioned above, you can safely set up your direct debits to come out of your Bills Sinking Fund Account. Set them to come out a day after your pay day so if there are any issues with your pay, you can pause the transfer if need be before it is withdrawn.

Never get a late fee for a bill again. And now you can take ‘pay bills’ off your to-do list and do something more fund instead 🙂

10. Start Reading finance books and getting yourself educated.
It may not be your thing to read finance books, but if you can get through 3 of them, you’ll be able to take in a lot of financial wisdom from some of the best financial experts around!

I suggest; Dave Ramsey’s, Total Money Make Over, The Barefoot Investor by Scott Pape, and Remit Sethi’s I Will Teach You to be Rich as a great place to start with your financial education.

11. Start savings for ‘big things’ you want in life
If you want motivation to get saving, this is it. Pick something that you want to save for that means the world to you. It could be that European holiday you’ve always wanted. Your upcoming wedding. A car upgrade. Your kid’s university education funds, or your first home.

Whatever it is, having those financial goals at the forefront of your mind will help you to save money. Every time you go to spend money on something non-essential ask yourself if that purchase is more important to you than your savings goal. Keep that big savings goal at the forefront of your mind.

When we planned our wedding, we had to ask ourselves this question constantly for 19 months whilst we saved up and planned our debt-free wedding. Sure it involved lots of sacrifices, date nights at home, saying no to seeing some of our favourite band, not having any money to do updates on our house etc, but it was all worth it to come home from our Honeymoon to Europe and not have one single debt repayment to make. And driving a car, or travelling to a new destination is going to be so much more enjoyable when you know that it was a reward for your hard work in saving up for it beforehand.

12. Change your consumer spending habits
As you work towards implementing the above financial goals, it’s important to reassess your spending habits so you can spend in line with your values, rather than just how you always have, such as buying things out of boredom or because they are on sale and you just can’t resist a good sale. I know myself, after years of living out of home I had accumulated a large amount of excess crap that I had wasted who knows how much on and after turning my finances around all that money I had wasted really hit me.

If you have debt or savings goals and want to temporarily boost your income, and make some changes to your spending habits a great way to do that, is to turn your clutter into cash. Kill two birds with one stone, and make it one of your financial goals to declutter your home and make some extra money for your Debt Snowball or savings goals at the same time. And I guarantee, after going through the process of selling your excess stuff, you won’t be able to walk away without changing your consumer habits and spending your money more intentionally.  Especially when you have some huge financial goals to achieve that will be more alluring than another pair of shoes.

Photo by Jungwoo Hong on Unsplash

General Advice Dislaimer: The information on this site is of a general nature. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions.