1. Give your money a purpose
Think about your future — what kind of life do you want? Try giving your money a "job" and set goals for your future that you can work towards now. It will then be the job of your finances to hit your goals. And remember, you can revise your financial goals at any time; they do not have to be set in stone. Life happens, causing goals to shift. It's okay to make adjustments to your financial planning when needed.
2. Organize your goals as short-,mid, or long-term
Setting big goals for the future can often feel overwhelming. If you categorize your goals into three separate measurements, they will feel much more attainable and less daunting. Try setting your financial goals into short-, mid, and long-term categories. Here's a quick cheat sheet:
— Short-term goals: 6 months to 5 years
— Mid-term goals: 5 to 10 years
—Long-term goals: More than 10 years
3. Avoid setting extreme goals
We all have major financial goals we want to hit. Whether it's paying off thousands of dollars of debt or saving up for a down payment on a house, our financial goals help keep us on track. But, setting up big financial goals that are beyond your scope can actually be worse for you in the long run.
For example, if you'd like to put $500 a month towards a loan, but you haven't even started putting $100 towards it yet, it's going to be difficult to review your budget and hit that goal. Focus on setting goals that are more doable, even if they're small. Small is still a start — this will allow you to build healthy financial habits that you can build on long-term.
4. Prioritize your financial goals
Everyone has priorities when it comes to their finances, and they can be easily organized in three categories: critical, need, and want. It helps if you categorize each of your finances, that way you know where you can cut on costs if push comes to shove.
Would you rather have 6 different streaming service subscriptions, or save up for an emergency fund? If funds become tight, you'll know where you can put your money instead.
5. Accept that financial surprises will always come up
Unfortunately, life happens. And it's not always perfect. Making progress on a financial goal, like paying off a credit card, always feels incredibly rewarding — until you have to use your credit card for an emergency, like new tires on your car. And then, the dreadful pay-off cycle begins again.
One way you can prepare yourself for the unexpected is by creating an emergency expenses fund. Keep it separate from your savings account, and use it to cover an emergency expense. This will help you cover surprise bills without taking on additional debt.
Financial experts often recommend putting emergency funds into a high-yield savings account, allowing you to earn higher amounts in interest every month, compared to traditional bank accounts. This way, your money can grow a bit faster, even if you aren’t regularly making contributions.