Want to know how to set financial goals at any age?

Learn how to set financial goals at any age

When it comes to personal finance, we often hear about the importance of setting financial goals, but it seems like such a big deal, doesn’t it? What to do, where to start, how much do I need to save and for how long?

It seems like there’s so much to consider that we end up putting it to one side, thinking that “one day I’ll get there”. But in reality, no matter what stage of life you’re at, setting financial goals at any age can bring many benefits, and best of all: it can be simpler than you think. Read on and find out how to set your own!

Step 1: Understand the reality of your personal finances

First of all, it’s essential to understand where you are and not where you’d like to be. Getting your accounts down on paper, or rather on your cell phone, is essential. Organizing what comes in and what goes out of your pocket helps you to better visualize your situation.

Start with the basics: what is your bank balance? What debts do you have? Do you have any emergency reserves? What is your monthly salary? This initial diagnosis can be made with apps like EveryDollar or PocketGuard, which help you keep track of your finances in a simple and practical way.

These apps aren’t a big deal and give you a clear picture of what’s happening with your money. As we live in a digital age, these resources will help you get organized without complications. The first step is this: know where you are in order to set the next goal.

Step 2: Set concrete goals

Now that you know where your finances stand, the next step is to think about what you want to achieve with your money. And note: you don’t have to be a millionaire to have successful financial goals.

The important thing here is to be specific. Instead of thinking “I want to save more”, define the amount you want to save: “I want to save $500 a month for my trip to Paris in 12 months”. Or: “I want to pay off my $3,000 credit card debt in 6 months”. Being specific helps you to have focus and a deadline to work towards.

Step 3: Plan and organize your spending

Once you have your goals well defined, it’s time to plan the practical part. The golden rule is: if you don’t control your spending, your goals won’t get off the ground. So it’s time to separate your finances into categories. One tip here is to use the 50/30/20 method, which basically consists of dividing your income like this:

• 50% for necessities: housing, food, transportation and other fixed expenses;
• 30% for wants: leisure, personal shopping, dining out, travel;
• 20% for savings and investments: your emergency and future reserves.

By following this plan, you can strike a balance between taking care of the present and investing for the future. A simple trick, but one that makes all the difference. Don’t worry if you don’t follow it 100% at first.

Step 4: Invest in your future

It sounds far away, but starting to invest is one of the most important parts of achieving your financial goals. And if you’re thinking “But I’m not an investment expert”, calm down, you don’t have to be. Starting small, with low-risk, easy-to-understand investments, is already a great start.

The good news is that nowadays there are several platforms that make the investment process easier, such as Acorns or Betterment, which do all the work of choosing the best funds and shares for you, based on your risk profile and objectives. You don’t need to know everything about the stock market to get started.

Step 5: Adjust your planning

Things can change along the way, and that’s okay. Sometimes unforeseen events arise, such as an extra expense, or perhaps you manage to save more than you expected.

That’s why it’s important to review your goals regularly. This helps you to stay motivated, make necessary adjustments and even increase the difficulty of the goals when you reach the previous ones.

Conclusion

Whatever your age, the important thing is that you start. The biggest mistake many people make is waiting for the perfect moment to start planning their finances, and that moment never comes. So instead of waiting, start today, with what you have, at the pace you can manage.

Every small step, even if it seems insignificant, brings you closer to achieving your goals. The key is to be consistent and remember that, over time, you will see the fruits of your financial choices.

Now, how about starting to review your finances and setting a simple goal for this month? I bet you’ll be surprised by the progress!

Written by

Juliana Raquel