Easy Ways You Can Turn Financial Goals Into Success

Whether the calendar is nearing January 1st and the New Year’s Resolutions are flowing, or something is igniting a self-improvement spark inside of you, you’re probably thinking about goal setting. And for many goal seekers, financial freedom is at the top of the list.

Having financial goals are great; They can teach valuable financial skills and pave the way to a financially-sound future. The problem, however, is that many people are unsure of where to begin.

To help, we’ve broken down the most common financial goals with tips to help you accomplish them successfully:

Improve Your Credit Score

The key to any financial goal begins and ends with a financial plan. Financial planning takes into account a holistic view of your current financial situation to create a roadmap that best defines your financial goals and the necessary steps to reach them. Your credit score is a critical component of your financial plan and can significantly impact your ability to achieve financial freedom.

“It’s better in the long run to take the time now to improve your score,” notes personal finance expert Farnoosh Torabi. “Because milestones such as buying a car, owning a home, and starting a business can come with hefty price tags, you can (and should) leverage the power of credit to help you achieve these goals.”

When it comes to improving your credit score, the standard practices include paying all of your bills on time, paying off debt, and keeping credit card balances low. An account that gives you a second chance at banking can help you achieve these micro-goals and, ultimately, your long-term financial goals by helping you manage your finances in real-time. You can use your account as a way to monitor your expenditures to ensure you can cover your bills and pay your debts. Once you maintain consistent, healthy financial practices, your credit score will improve, and you can focus on your next exciting financial goal.

Start Saving Money

Saving money is an all-encompassing goal, meaning that it includes or is dependent on other financial habits, such as budgeting and spending habits. Seeing as it is such a broad aspiration, the best way to set yourself up for success is to begin by writing down your savings goal. As a matter of fact, merely writing out goals makes you 42% more likely to achieve them, according to a study on goal-setting from the Dominican University in California.

By putting pen to paper, you are essentially transforming your goal into a S.M.A.R.T. goal, determining if your goal is specific, measurable, achievable, relevant, and time-bound. To illustrate, begin by asking yourself what you want to accomplish by saving money. Perhaps, you decide you want to save enough money to retire by age 65. You would then need to measure your progress. In this case, you might do so by deciding how much money you need to save to retire.

From there, you will gain a better understanding of how attainable your goal is and if you need to re-strategize, such as changing your desired retirement age. It’s important to make sure your goal is relevant, as well. This might mean asking yourself, “Is this the right time to be saving for retirement?” Lastly, ensure your goal is timely. It’s one thing to say you want to save X amount of dollars for retirement, but a better goal is to save X amount of dollars in X years.

Create a Spending Plan

With any goal, there are tasks or things you must do to get you to your end result. A perfect example here is to create a budget. Not only is devising (and sticking to) a budget a worthy goal in and of itself, but it also makes for a great stepping stone for nearly all your other financial goals.

A simple way to establish a budget is to follow the 50/30/20 rule, which divides and allocates your after-tax income into three categories: needs, wants, and savings. Once you calculate your after-tax income, designate 50% to essential and necessary expenses like housing, groceries, utilities, and transportation. Next, devote no more than 30% of your income to wants or lifestyle expenses, such as cell phone plans, gym memberships, hobbies, dining out, and entertainment. Last, but most certainly not least, use the remaining 20% of your income to save money and pay off any debt.

By establishing a budget or a spending plan, you will gain a better understanding of where your money is going and thus catapult you further into financial freedom. Budgeting provides countless benefits and opportunities for financial growth by highlighting your spending habits, preparing you for unexpected expenses, and even improving conversations surrounding money.