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How to Set and Achieve Your Financial Goals

Kai Daniel
The start of the year is always a great time to reflect on your past achievements and plan for your future goals. Whether you want to save more, pay off debt, invest wisely, or simply improve your financial well-being, setting clear and realistic financial goals can help you achieve them, but how do you set effective financial goals that you can stick to? And what are some of the best practices to achieve them? Here are some tips to help you start the year with a fresh financial perspective and a roadmap to success.

Assess your current financial situation:

Before you set any financial goals, you need to have a clear picture of where you stand financially. This means reviewing your income, expenses, assets, liabilities, and net worth. You also need to track your spending habits and identify your needs and wants. Yes, that means tracking every pie and every trip to Kmart.

A good way to do this is to create a monthly budget that shows how much money you earn and how much you spend on different categories, such as housing, food, transport, entertainment, etc. You can use online tools like Pocketsmith or make use of Bring On Monday’s personal finance services.

Define your financial goals and prioritise them!

Once you have a clear understanding of your financial situation, you can start defining your financial goals—Specific, Measurable, Achievable, Relevant, and Time-bound (SMART) outcomes that you want to accomplish with your money.

Some examples of financial goals are:

  • Save $10,000 for an emergency fund by the end of 2024.
  • Pay off $5,000 of credit card debt in 12 months.
  • Invest 15% of your income in a retirement account every month.
  • Buy a house with a 20% down payment in 5 years.

You may have multiple financial goals, but you need to prioritise them according to their importance and urgency. For example, you may want to focus on building an emergency fund and paying off high-interest debt before saving for a vacation or a big purchase. As fun as blitzing up the Waikato River on a jetski sounds, it’s probably not at the top of the list.

Break down your financial goals into smaller steps:

After you’ve defined and prioritised your financial goals, you need to break them down into smaller and more manageable steps. This will help you stay motivated and track your progress along the way.

For example, if your goal is to save $10,000 for an emergency fund by the end of 2024, you can break it down into monthly or weekly savings targets. You can also identify the specific actions that you need to take to achieve your goal, such as cutting back on unnecessary expenses like that gym membership you never use, increasing your income, or automating your savings.

Review your financial goals regularly and adjust as needed:

Setting financial goals is not a one-time event. You need to review your financial goals regularly and adjust as needed. This will help you stay on track and overcome any challenges or changes that may arise. For example, you may need to revise your financial goals if your income or expenses change, if you face an emergency, or if you achieve a milestone sooner or later than expected. You may also need to update your financial goals if your priorities or preferences change over time.

Celebrate your achievements and reward yourself!

Achieving your financial goals is not easy. It takes time, effort, and discipline. That’s why you should celebrate your achievements and reward yourself along the way. This will help you stay motivated and positive about your financial journey.

You can celebrate and reward yourself when you reach a certain percentage of your goal, when you pay off a debt, when you reach a savings milestone, or when you make a smart investment decision. You can also share your achievements with your friends and family and get their support and encouragement. However, make sure that your rewards are not too expensive or counterproductive to your financial goals. Don’t splurge on that jetski or a lavish vacation to Europe if you are trying to save money or pay off debt. Instead, choose something meaningful and affordable, such as a nice meal at a restaurant you’ve always wanted to try, a movie night, a book, or a hobby.

Setting and achieving your financial goals can be challenging, but also rewarding. By following these tips, you can start the year with a clear vision and a realistic plan for your financial future. Remember, you don’t have to do it alone, we’re here to help (after all, that is why we exist!).

Kai Daniel

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