Setting Financial Goals
It’s hard to imagine where you’ll be a few from now but it’s time to start thinking about how you want to live and how to prepare for your future. Can you afford a new car? Do you want to start your own small business? Or, are you looking forward to buying a house? Whatever your goals may be, plan for them now.
Set goals for yourself
When setting goals for yourself, it’s important that they motivate you. This means that your goals are a high priority and that there is value in achieving them. Once you have your financial goals in mind, write them down. There’s something about seeing your goals in writing that can motivate you to review them regularly and stay on track.
Keep your goals top-of-mind
Out of sight, out of mind, right? If you aren’t thinking about your financial goals, it can be hard to stay on track. Post your written goal somewhere visible, a spot you look at every day. Or, better yet, use a visual to remind you of your goal. If your short-term financial goal is to save for a computer, clip a photo of a computer out of a magazine and tape it to the inside of your day-planner, tack it on the front of your refrigerator, or pin it to a message board. Every time you’re tempted to download a song or buy that expensive cup of coffee, seeing the picture of that computer will help you stay on course.
Pay yourself every month
No, you aren’t paying yourself so you can buy that new TV you’ve had your eye on. The money you save will help you achieve long-term goals, or those extra funds could help you in an emergency situation - in the event your car breaks down for example. Typically, it’s recommended that you save at least 10% of your monthly income (no matter how meager that sum may seem).
Most banks can set up a goal savings account that automatically transfers money from your checking account to your savings account bi-monthly, monthly, or as often as you like. That way it is less likely you will miss the money that’s not there anymore.
Use caution with credit cards. A credit card is just that--a card that extends a line of credit to the cardholder. When you use your credit card, the issuer is essentially extending a short term loan to you. Pay off your balance each month and you’ll begin to build solid credit; carry a balance month to month on your card and you’ll pay the issuer interest on your balance.
Achieve Your Life Goals Together
From a new house to kids to an early retirement, it's important—and exciting--to plan for your future, and planning goals for a couple or a family requires open communication. Here are a few places to start the discussion:
- Goals and expectations: Where do you want to be in five years? Ten years? Twenty years? Share your goals and expectations. Write them down. Create a plan for achieving them.
- Understand spending styles: Is one person a saver and another a spender? How will you manage everyday expenses? Consider personal spending habits when determining how to establish and manage your finances.
- Current savings and assets: Can you consolidate assets to simplify financial recordkeeping? Is it time to start saving in earnest? Do you need to beef up your retirement savings efforts? Learn more about retirement planning.
- Outstanding debts: What debts does each person bring to the relationship? Can you possibly consolidate debts and lower borrowing costs? Banks can offer a variety of solutions that might help.