How to focus on your finances
Setting good financial goals can help you eliminate debt, save for short-term or long-term goals or fund your retirement account. It is imperative to develop a game plan for setting good financial goals to attain them and build the wealth you desire.?
You can better prepare for the future when you set solid financial goals. But knowing how to set them — and achieve them — is key.?
“Financial stability helps people sleep better at night, which is important for overall financial health, and it also makes you feel more confident in the future,” said financial activist and Priceless Tay founder Taylor Price. “Potentially, you could take risks in your career or in a side hustle. That may not be possible without having those financial goals.”
Setting financial goals so you can have "benchmarks" is a good idea, said personal finance coach and TheMoneyCoach.Net founder Lynnette Khalfani-Cox.?
“[Obtain] clarity around what you want to do in the short-, medium-, and long-term, and make sure you have achievable results,” Khalfani-Cox said.?
For those benchmarks, Khalfani-Cox advised staying away from vague goals.??
They might say, ‘Oh, I want to buy a new house at some point in the future,’ or, ‘I want to buy a new house in 2023.’ Well, that's just kind of like a wish. That's not really a goal. You really want to think about SMART goals, goals that are specific and measurable, action-oriented, realistic and time-bound.”
Start With a Self-Assessment When Setting Good Financial Goals
Obtain a clear idea of your finances before developing a game plan for your financial goals.
“From a financial perspective, you have to step on the scale,” Khalfani-Cox said. “If you are saying, ‘I want to pay off debt,’ or, ‘I want to save more money,’ you have to know where you are starting from, what's your starting point.
“I think all too often a lot of people are afraid to do the deep dive or to look in the mirror, and see, ‘OK, how much damage have I done? Where is my level of savings?’ You need to track and measure incremental progress along the way.”
Also, understand what you want to accomplish during different timeframes — and try not to list too many goals to achieve at once, Khalfani-Cox said.?
“I think a lot of times people overwhelm themselves with goals, or they don't think out the execution part of reaching their goals and how much effort it is going to take to achieve [them] in a specific period of time,” Khalfani-Cox said.?
Develop a Budget to Set Good Financial Goals?
Setting a budget will help you develop your financial game plan.
“Without having any idea on where your budget is, it's really hard to create financial goals that are SMART,” Price said. “So starting off with a budget is really important.”
“Then ask yourself a few questions like, ‘Are you maximizing your retirement account? Do you have an emergency fund? Do you have debt?’ If so, what's some high-interest debt that you can pay off or offload? Can you save more each month? If you have credit card debt, are you carrying a balance over each month?”
You could start creating your budget by adhering to a budgeting concept called the 50/20/30 method, Price said, which is 50% needs, 20% wants and 30% savings.?
“Some people do the other way around where it's 20% savings and 30% wants,” Price said. “I always think savings should go first. But depending on where you live, it's needs-based. If somebody lives in San Francisco, those needs will be a lot higher than somebody who lives in a rural town in the Midwest.”?
In addition, Price suggested automating your savings through round-ups to help build it. You can use a round-up app like Acorns or Chime, or opt into a round-up program via your bank.?
Learn How to Cut Debt to Set Good Financial Goals
American household debt hit a record $14.6 trillion in the spring of 2021, according to Debt.org. So, it is a good idea to start cutting yours. Once you eliminate debt, you can focus better on saving and other financial goals.?
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“Having dug myself out of debt, one of the things that I realize now is that getting out of debt is one thing, but staying out of debt is the real thing, is the much harder goal to accomplish,”? Khalfani-Cox said. “A lot of people who pay off the debt go right back into debt.”
You can help break the cycle by adopting a new mindset about your finances, Khalfani-Cox said.?
“I tell people to think about adopting what I call a zero-debt mindset,” Khalfani-Cox said. “That means, one, having rules and guidelines for when you whip out your credit card. You shouldn't automatically think that using credit to pay is always the norm or is a crutch for you.?
Take Advantage of Investing in Your 401(k) and IRA Accounts
Saving for retirement might not be the first thing on your mind when you are younger, but investing in your 401(k) and/or an IRA account as early as possible can help you hit the target for your future financial goals faster.
“Ask your job if they have a 401K available and if they have an employer match back,” Price said. “That basically means free money for that person who has that job. That is the first question to ask because who doesn't like free money?”
Celebrate Small Wins?
Remember to celebrate your wins as you set and achieve your financial goals.
“One of the biggest tips that I give people who are goal-setting is to celebrate those small wins,” Khalfani-Cox said. “People want the end result, but again, you have to keep in mind the timeline. Those small victories along the way should be absolutely celebrated, recognized, and compounded. You want to keep doing the same thing that has gotten you results.”?
(A version of this article first appeared on November 14, 2022, on the Get Hired by LinkedIn News page. You can read the full article, which was written and reported by Brandi Fowler, by clicking here.)
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It is important to keep track of where your money is going. This LinkedIn Learning course teaches you how to budget and shift your mindset about money. You can live a comfortable life and within your means, this is how. Watch the course below or by clicking here.?
Senior Consultant at Red Hat, 24K connections
2 年One of the most important financial lessons comes from Rich Dad Poor Dad. After college your finance sheet is your report card. Four numbers. Assets. Liabilities. Income. Expenses. Two results. Net worth. Cash flow. If your cash flow is negative you will eventually be broke. If your net worth is negative you are already (still) broke. Report cards can be of low value, unless you are flunking out. Finances work like that as well.
Civil Engineer
2 年Regardless how good you are in setting up your financial goals and budgeting, it is hard to predict your financial futures without taking risk and have faith in what the future brings. Like the stock market our financial goals are unpredictable.
IT Consultant
2 年Our federal government could use some advice on having a budget and learning to save. The amount of debt is multi generational from only a few years of spending. I'm pretty sure we may never get out debt at this point.
Business owner at Lil Momma Gifts
2 年Thank you. I kept reading about budgets. I never really understood how to do one. No one to teach me. Back in March of 2022, my car was messing up. April 7 it caught fire. No car no work. Fortunately for me, a client of mine lived not far from where my husband worked. At first, he took me to her house on his days off and one day on the weekend. I also had a friend I was helping. My husband took me over there on the weekends. My client that lives close by to where he worked had a call from the home health care service that medicare was complaining and they needed to get her another aid. We talked and agreed that I could come to her apartment when my husband went to work. So I was up at 4 am and did what needed to. Long story short. February I got a credit card number one. Maxed it out trying to keep transmission fluid in my car to keep it going. March I had gotten the 2nd one. Use it to pay my phone bill. 85 Dollars. Then the end of March I got a small loan. 700.00. Now I have a total of 9,000.00 in debt. Was $13,000 most of it being the car. Now I still have no car. I have created a budget. I am paying off my loans little by little and I am investing. Slowly building wealth as I go.
I work with individuals and small business owners that want to keep more money in their pockets. | IRS Enrolled Agent | Author | Professional Speaker | Radio Host of "Dollars & $ense"? With Kristine
2 年Lots of good information here. One of the best things to help yourself succeed with money is understanding your behavior with money. If you take 100% of your ability to be successful with money, only 20% is head knowledge, such as creating your budget. The other 80% is what you are actually doing with your money, like choosing to eat at home from the food in the fridge or cupboards (always cheaper) instead of dining out. It's a choice. And for some people, it's more a matter of increasing income if expenses are already cut to the bone, which might mean getting a side hustle. It is ALL possible. Thanks for posting.