Writing down your income and expenses as well as your financial goals on paper can help you to achieve financial stability.
Knowing exactly where you stand in terms of money will help you to get a clearer picture of your situation.
Many people often bury their heads in the sand when it comes to their finances. However, you must be able to sort out your money properly so that you set realistic yet appropriate financial goals.
Here we will give you a few tips and tricks to help you properly manage your long-term financial goals.
Write out a list of financial goals
One of the most important steps that you can do when setting long-term financial goals is to know exactly what they are. This will allow you to know what you are working towards and will keep you on the right track. For examples, see: https://www.goodfinancialcents.com/long-term-goals-examples/.
There is no proven list of what your list of long-term financial goals should look like. This list will be different for every person depending on your lifestyle, financial situation, and whether or not you have children.
You should first write out a list of all of your goals and order them. You can sort them into categories of importance, size (in terms of how much money they require), or even how immediate.
The choice is completely up to you, but you should keep in mind that this will help you organize your money accordingly. So, they should help you formulate a plan of action.
Analyze your income and expenses
Once you have your list, you should go through your finances and give an honest assessment.
Using any method that you feel comfortable with, either using a computer or with a pen and paper, calculate exactly how much money you have coming in (i.e. your salary) and separately work out your expenses (e.g. taxes, food bills, any loan repayments, etc.).
If you have any repayments, such as for a mortgage, a car loan, student debt, etc. make sure that you factor this into your expenses.
Once you know these two lists, subtract the expenses from the income.
Expenses (bills, etc.) – Income = Money to Spend
This will let you know how much money you have to spend at the end of the day.
If you need to this will also help you to work out where you can save money. For example, if your food bill seems very high for a weekly shop consider changing supermarkets, says The Pennyhoarder.
You should then be able to allocate the rest of your money to the appropriate places. For example, if you want to set up a fund to buy a car then you work out exactly how much money you can save per month to put towards this goal. You should never allocate more money than you can realistically afford.
Start an emergency fund
A very important thing to set up is an emergency fund. This should be separate from your general savings account. An emergency fund is to be used in the case of any unexpected bills, such as if your roof started leaking and you need to pay to fix it. Think of this fund as a rainy day fund.
This way you will not need to touch your savings account (or any other pot that you have set up) if you must. This will allow you to keep saving towards the things that you want without the need to dip into that money.
You should consider setting up this fund before saving for any bigger things. This way you will know exactly where you stand with your savings.
Set out days for working on your finances
To keep working towards your goals, you need to make sure you are staying on top of them. This means that you should set aside a little bit of time each week to write down how you are doing.
For example, if you are keeping a spreadsheet of your finances then you can budget your money for the week and see where you stand. You can put your money into the correct savings pots.
Look to the future
Once you have your current savings pots set up you should think about the future. Are you looking to buy a house? Do you want kids? You should keep all of these things in mind as they will of course cost money.
So, you should consider how immediate these things are for you. If they are not far away then consider rearranging your goals. For example, maybe you do not need to buy a new car and that extra money could go towards a deposit for a house.
Make sure that you are mindful of where you want to be and when. If you can budget accordingly then you should have the money by the time that you need it. This can save you a lot of stress in the long run.
Money can be a tricky subject for a lot of people. However, staying on top of your finances can lead to long-term wealth and a stress-free life.