The number one reason why people fail to save money is because they do not set financial goals.
Aim for nothing and you will get nothing.
In our society, everyone wants instant gratification. They are looking for a quick solution, but when it comes to saving money there is no magic way for it to happen overnight.
You cannot expect to see results overnight and then get discouraged when your savings account continues to decrease.
It is all about setting financial goals.
Having goals will help you stay accountable, show you your progress and have an end result to work towards.
The gratification comes in achieving a goal or watching your progress as you build your savings account.
I don’t want you to fail.
Here are 3 steps you need to take today to set your financial goals:
#1 – Develop your goals
The first thing you need to do is think about your personal financial goals. Do not just think about what you want them to be, WRITE THEM DOWN. Begin brainstorming about 3-5 financial goals you want to set for yourself.
What do you want to achieve? What are you working towards? Is it a new house? Paying off debt? Saving for your child’s college?
Think about your life and where you want to be in 6 months, or a year or even 3 years.
#2 – Be specific
The next step is to be very specific with your goals. You need to determine if your goals are short-term or long-term goals. I like to follow the SMART criteria. Your goals need to be:
Specific – why you want to achieve this
Measurable – how much money you need to save
Attainable – how will you reach this goal
Relevant – is it realistic
Time-based – when do you need to reach this goal
For example, if your long-term goal is to buy a new house, following this criteria it could look something like this:
“I want to buy a 4-bedroom house in Finley Boro and will need to save $10,000 for a down-payment. I will directly deposit money from my paycheck every single month to a savings account so that I can save this money in 2 years.”
#3 – Action Steps
Once you have gotten specific and have your goals written down it is time to create an action plan to achieve those goals. Even though you have figured out how to attain the goal you still need to break it down so that you know exactly what needs to be done.
In the example I just used about purchasing a new house the action steps could look something like this:
- Stop buying Starbucks coffee 3x per week to save $40 per month.
- Pay $40 towards my credit card bill for the next 4 months to pay it off.
- Put away $160 bi-weekly from my paycheck into savings account for house.
- Pay extra $40 per month into savings account for house.
Each of the action steps will help you to stay on track so that you can reach your long-term goal.