What is the financial goals definition?
Financial Goals Definition: Set goals to achieve throughout the year in relation to finance. Think New Years Resolutions, but for finance.
Setting financial goals can seem daunting, but they don’t have to be! Think of a goal you want to reach, break it down into digestable, sizeable chunks where you could realistically build into your budget and still reach, and automate it!
For example, say you have a $5,000 student loan you want to pay off, and you can realistically throw $200 a month to it, you’ll be done paying it off in 2 years and 1 month. (5,000/200 = 25 months = 2 years 1 month).
After each quarter, the recommendation for you is to check in on the progress of your goals. Are you on track? Could you improve? Was there a big life event that may have impacted the ability to reach these finance goals? Re-evaluate and adjust your goals to your financial situation. Personal finance is just that – personal.
This post is about the financial goals definition.
Reminder: it is okay if you didn’t reach these goals. The more important aspect is that you’re evaluating your financial situation holistically to gauge what makes sense for your situation, and work towards your goals.
Progress is more important than perfection.
Things to consider:
Income
- Think of this as your shovel to dig and build with.
- Can you increase the size of your shovel?
- Are you able to increase your income?
- Take on extra hours,
- side hustle,
- find a higher paying job?
- The list goes on.
Remember, your earning potential is limitless, but the amount you can “cut back on” is limited by your shovel/income.
Debt
- How quickly you need to pay off debt
- Create a list of all loans, interest rate, term length, and determine how you want to tackle your loans (i.e. Snowball vs. Avalanche Method)
- Consider managing debt options
- Do your loans have high interest rates? Are you able to refinance?
Big purchase! (House, car, hand bag, etc)
- Do you need a new (to you) car?
- Saving up for a house, condo, real estate in general?
- Saving for that LV/Chanel bag you’ve dreamt of since you were a kid?
Budget
- What makes sense to you? There’s the 50/30/20 rule some utilize for their budget
- 50% goes to necessities (rent, food, gas, etc)
- 30% goes towards wants
- 20% goes towards savings (savings account, retirement, investing, etc).
- This is a suggestion, and not a rule. I’m flexible with mine – some months I pay for auto insurance in full, other months I don’t. It’s unfair to say that specific category was over budget when split across the year it isn’t.
