4 Tips for Reaching Your Financial Goals

When it comes to reaching financial goals, many Americans are struggling. In fact, most Americans don’t even have any financial goals, with57 percent of U.S. adultsnot having a written financial plan, a BMO Harris Bank survey found. Many live paycheck to paycheck, with 31 percentnot even having $500saved up for emergencies. When Americans have this much trouble managing their personal finances, it’s no surprise that cash-flow problems are a large cause of U.S. business failure.

Reaching your financial goals can be challenging, but it’s a lot easier when you follow a sound strategy and make use of various resources. Here are four tips for achieving your financial goals more quickly and efficiently with fewer setbacks.

Set Financial Goals

The first step in achieving financial goals is to set clear goals as a starting point. Divide your financial goals into short-term, mid-term and long-term goals. Short-term goals are items you can achieve within a few months or years, such as saving up an emergency fund, paying off a medical bill or paying down a small credit card. Mid-term goals can include items that take a few years, such as paying down a larger credit card, saving for a new car or putting a down payment on a house. Long-term goals can include items such as paying off a student loan, paying off a mortgage or saving for retirement.

Similarly, you can break business goals down into short-term, mid-term and long-term goals. A long-term goal might be an annual revenue goal, while a series of short-term goals might be to raise quarterly return on investment from an advertising campaign, for instance.

Create a Budget

Once you have some financial goals set, you should create a budget. Your personal budget should specify how much you spend each month and how much you put toward saving and paying down debt. A good budgeting rule of thumb is the 50/20/30 rule. This guideline advocates putting 50 percent of your monthly income toward paying for necessities, 20 percent toward paying down debt and savings, and 30 percent toward variable expenses and luxury items. Similarly, you can divide your business budget up into categories such as payroll, rent, IT and marketing.

To automate your budget, you can use cloud-based apps such as Mint for personal finances or QuickBooks Online for business finances. This enables you to manage your finances using aconvenient mobile device such as a Galaxy Note8, which has a large 6.3-inch screen for easy viewing and app management.

Automate Your Savings Deposits

Apps such as Mint can also help you automate your savings deposits, a key to effective financial management. If you hand your savings deposits manually, there’s always a temptation to spend them on something else instead of setting them aside. Automating the process removes that risk and ensures that you stay on budget.

To create an automated savings plan, the easiest strategy is to set up direct deposit with your employer and have part of your deposit automatically sent into a savings account. If you don’t have direct deposit, you can still arrange with your bank to have a certain amount automatically transferred from your checking to your savings account at a selected interval. You can also use a variety ofautomatic savings appsthat work with your bank.

Choose Smart Investment Vehicles

When setting up an automated savings system, it’s important to make the right choice with regard to investment vehicles. A good investment vehicle should earn you interest so that your savings grow after you deposit them.

Before pursuing other options, you should first take advantage of your employer’s 401(k) matching plan (if available) or Roth or traditional Roth and make sure you’re maxing out your 401(k). Other options you should consider include a Health Savings Account and SEP IRA. Explore these options before considering other investment options such as stocks and bonds.

Setting clear financial targets, creating a budget, automating your savings deposits and choosing smart investment vehicles are four key steps toward reaching your financial goals. Following these steps will help you stay on track with your savings budget as you progress toward achieving your financial dreams.

Published by Kidal Delonix (1196 Posts)

Kidal Delonix is a contributor to Mr. Hoffman's blog. The views and opinions are entirely his/her own and may not reflect Mr Hoffman's views.

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