Until your home budget dries up completely or you see a massive money surplus in your accounts, it isn’t that easy to tell if you’re performing well in the financial sector. This is what financial goals are there for. By achieving or failing to meet them, you will constantly see the milestones to track and will always have a reliable way of telling if you’re on the right track. For this to work, you must have at least some directives that can point you towards both short and long-term financial goals worth committing to. Here are five of them.
1. Making an emergency fund
An emergency fund is the first objective you need to set, seeing as how it provides you with a safety net in a case of an emergency. Imagine you lost your job tomorrow, which is something that can happen even without any previous indication. You don’t have to be fired (it’s always possible for a company to be shut down unexpectedly), yet the result is always the same – you lose your reliable stream of income. What if you had to face unexpected medical expenses, or suffered a massive property damage that needs to be fixed right away (something that your insurance won’t cover)? As a rule of thumb, your emergency fund needs to be able to cover at least three months of living expenses. Although, it would be much safer if you were to make it even better-stocked.
2. Free yourself from debt
There are two massive benefits of freeing yourself from debt and one of them isn’t that easy to quantify or place on the priority list. First of all, by handling your debt situation, you’re no longer obliged to pay for your interest rate, which is, on its own, a massive boost to your budget. As for the second, a more subjective perk of living a debt-free life, a lot of people find the stress revolving around a pressing debt issue pretty hard to handle. This might somewhat depend on the person in question, yet freeing yourself from debt brings at least some degree of psychological, and emotional liberation as well.
3. Diversifying your sources of income
In the first section, we’ve thoroughly discussed the danger of having your primary stream of revenue blocked. Nevertheless, having even the greatest emergency fund isn’t a permanent solution to this problem. By diversifying your sources of income you can ensure that you have a constant cash flow even if you lose your day job, or see your small business brought to a halt. You don’t have to commit to anything too time-consuming.
This can be something as simple as setting up your own blog, a YouTube channel, or a page on eBay. You can even make money online by doing surveys; in other words, you get paid for merely having an opinion and sharing it in the right place.
4. Boosting your credit rating
Even if you don’t need a loan right now, expecting that you can go through your entire adult life without ever needing one is a tad unrealistic. Once you come to terms with this simple fact, it becomes more than clear that boosting your credit rating is something you might want to consider.
Since this can be done with something as simple and mundane as better credit card management, it would be safe to claim that it really doesn’t take much effort. On the other hand, you could also apply for a minor loan, the one you can pay back in six months or so, and deal with payments as diligently as possible.
5. Become more tech-savvy
At the end of the day, in the era of personal finance apps, finance projection platforms and similar digital tools, avoiding to include technology in your money-making process means limiting yourself quite a bit. Fortunately, in 2018, most apps are developed with first-time users in mind, which means that your transition from analog to digital budgeting shouldn’t be that complex to begin with. The benefit of these apps comes from more than their pragmatism. Through transparency of your spending, a notification system, and a habit to note every single expense down, you will also develop some positive money-saving routines.
At the end of the day, you should understand that learning how to establish financial goals helps you in more ways than just creating the surplus for your budget. Sure, managing the finances of a business is not the same thing as doing so for a household, yet, you would be surprised at just how many similarities and overlapping there are. So, if there was ever any doubt in your mind, establishing financial goals is definitely a worthy skill to have.