Spring is here, and there is no better time to perform a spring cleaning of your finances. One way to get your finances whipped into shape is by setting reasonable financial goals that can help you get on track for a successful year. Always make sure that your goals are specific and attainable so that you do not succumb to frustration and end up giving up before you achieve them. To start your spring season off right, consider one or more of the five financial goals listed below.
1. Create and Stick to a Budget
While most people believe that they are following a budget, few have actually sat down and created a detailed budget that accounts for all of their expenses. Start by setting a budget that includes all of your major expenses including home expenses, insurance, car expenses, and utilities. Then create a budget for costs that may fluctuate such as clothing expense, gifts, medical costs, and food. Finally, add budgets for monthly savings goals such as an emergency fund, vacation funds, and long-term savings. After finalizing your budget, record all of your expenses throughout the month, making sure to record every transaction. This will give you a true picture of where your money goes and how far off your budget you may be spending.
2. Trim Some Fat Off Of Your Monthly Expenses
Once you have identified where your money is being spent, now is the time to find areas where you can safely cut back, to either give a cushion to your budget or start adding more to your savings. Start small by finding one or two areas where you can afford to cut back. Start by shopping some of your monthly bills like cable and phone. Many times there are better options or new packages that you can switch to which will provide you with a lower monthly cost.
3. Climb Out of Debt
Unfortunately, debt and life go hand in hand, but it can easily get out of control, hindering you from meeting your long-term financial goals. Whether you are bogged down with student loan debt or credit card debt. Having a plan to aggressively pay it down and sticking with it can save you a significant amount on interest, and provide you with more money for your savings goals. Consider possibly consolidating student loans. When it comes to credit card debt, try to make at least double the minimum payment.
4. Save More for Retirement
The cost of retirement is continually rising, and if you want to ensure that you have enough to sustain you during retirement, you should be saving as much as you can as early as possible. The earlier you put your money into your retirement savings, the longer it will have to grow, providing you with a better return on your investment. Make a point to make some room in your budget to increase your contributions a couple of percentage points.
5. Start or Grow Your Emergency Fund
An emergency fund is a great way to stay on track financially when the unexpected occurs. Loss of employment, major medical expenses, or significant house repairs, can lead to unexpected costs that can ruin your budget for months. The rule of thumb is to have at least six months of expenses saved, making sure to replace funds anytime that you draw from them. If you already have your emergency fund started, set a goal to increase what you add to it each month even if it is only $50. If you don't have an emergency fund, now is the time to start it. Set reasonable goals for your fund, so it doesn't seem overwhelming. Set your first goals at $2,000 to $3,000, which should be able to cover any major car repair or the deductible on your homeowner's policy if you were to sustain a loss.
Whether starting small or building on other goals, having set financial goals is a great way to get motivated to get your finances in shape for the upcoming year. Remember to always set goals that are specific, measurable, and attainable, to prevent frustration and allow you to see the results of your hard work. If you need help getting started, please schedule a free 30 minute consultation.
Photo by Mike Danneman
Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. Highball Advisors encourages you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Highball Advisors, and all rights are reserved.