Goals are one of the principal starting points of any financial plan. It may seem like the idea of goal setting is reserved for life’s biggest adventures, but in reality having a different spectrum of goals, whether it be short term or long term, is crucial for keeping your finances and savings on track. But how do you ensure your financial goals become reality in your lifetime? There are a few basic steps that you can take towards living your dreams!
Firstly, and perhaps the most fun part of savings, is selecting something substantial to save towards. Key word is substantial. That’s not to say that one goal is better than another, but try to think about the landmarks in life that you want to hit and how your finances can help enable them. Think about what you’ve always hoped to achieve, whether that’s a certain lifestyle when retirement hits, or your children’s college tuition. Write down those savings goals and try to get as specific as possible. You can’t get to your destination unless you have a road map. Having a clear objective of what you are saving for is the first step.
Once your first iteration of your list is complete, start mapping out each of the goals into your very own roadmap for success. Figuring out how much and how long you have to save will be two of the hardest estimates, but always realize that these are moving targets made to be readjusted (within reason) as life happens. Whether you make $100,000 or $1,000,000 a year, you need a snapshot of how much you’re spending. That’s where a budget comes in.
Now for an important adjustment to the standard budget conversation, start with savings as your first line item. As Warren Buffett says, “Do not save what is left after spending, but spend what is left after saving.” Your future self will thank you!