Setting short-term, mid-term or long-term financial goals goes a long way in the journey to become financially secure. Most times, when you are not working towards a specific thing, you often realize that you spend more than you should. The end result of this is that you come up short when you need money for unexpected bills.
This may also mean that you get stuck in a vicious cycle of debt and feel like you never have enough cash to get properly insures, leaving you more vulnerable than you need in handling some of life’s major risks.
1) Create an Emergency Fund
Emergency fund is the kind of money that you set apart specifically in case of unexpected expenses. It is safe to start small and then expand much later so that your emergency fund can cover larger financial difficulties, like unemployment.
Before COVID-19, those who had not set up an emergency fund would have probably wished they did, and those who had it set aside would have been very grateful that they took the decision. Emergency fund should be a top priority, it helps to create financial stability you need to achieve other goals.
2) Establish a Budget
According to Lauren Zangardi “You can’t know where you are going until you really know where you are right now. That means setting up a budget”. She recommends opening a savings account and setting up an automatic transfer for the amount you have determined you can save each month based on your budget.
3) Pay off your Loans
Loans are a major drag on many people’s budgets. Lowering or getting rid of those payments can free up cash that will make it easier to save for other expenses and meet your financial goals
Finally, the above guides are not absolute, and would probably not make a perfect, linear progress towards setting financial goals, but the most important thing is not to be perfect, but to be consistent.
Setting financial goals from time to time can help to monitor your financial progress and a buildup of this over the years would also help you to build a solid financial ground.