In five years, what do you want your life to look like? How about in 10 years. Fifty?
Whether you’re trying to buy a house, are ready to turn that dream vacation into a reality, are focusing on paying off debt, or wanting to improve your credit score, (or all of the above), it’s important to set financial goals in order to establish a plan to get you to where you want to be.
Here are five ways to get started:
1. Consider Your Dreams
The first step in setting financial goals is deciding what those goals actually are. It’s easy to have a vague idea: In the next two years I’d like to pay off some of my debt and renovate my kitchen. In five years I’d like start my own business. Someday, I’d like to travel the world. A dream is just a dream without a plan. Sit down, and really think through what you want to prioritize before trying to put any kind of investment behind it. Good Financial Cents lays out some general goals that would be helpful for anyone, and delves into how to figure out what you want to achieve.
2. Break it Down
Chances are, your timeframes are all over the map. Saving for retirement requires a much different approach than paying off your car loan. In Charge Debt Solutions has a six step plan that involves prioritizing by short-term, mid-term and long-term goals, and then developing a goal chart to make measurable, action-oriented progress.
3. Automate Everything
It’s much easier to not spend $100 on a new pair of shoes if that money goes straight into a savings account you never see. Automating your accounts is also practical for paying all of your bills on time, and as well as making sure you’re contributing correctly to any savings and investments. By putting as much as you can on autopilot, you guarantee your money is going where you want it to go. Forbes has some good advice on how to automate your finances in five easy steps.
Don’t let the papers pile up
4. Download a Budgeting App
It’s one thing to create a budget. It’s another to actually stick to that budget, and not dip into the savings you’re working so hard to squander. There are many apps out there that can connect to your bank accounts to help you track where every dollar goes. Many offer additional tools such as charts and graphs so you can get a solid visual understanding of how much you’re actually spending, and determine the areas where you need to scale back. The Balance highlights its top picks for personal finance budgeting apps.
5. Find a Financial Advisor
Don’t be afraid to call in an expert who can help manage all your assets, and provide advice on everything from choosing the right stock options, to managing major life events such as a wedding or birth of a child. U.S. News Money weighs in on how to find the right type of financial advisor to fit your needs.