We are a few months into 2019 and you may be thinking to yourself, hmmm I had all those good intentions at the beginning of the year to be on track financially, follow a budget and set some financials for myself and my family.
How is it coming along?
Are you sticking to it?
I’d like to share with you why I think it is so important to have financial goals.
As a Licensed Insolvency Trustee (“LIT”), I speak to so many people who are looking to get back on track with their finances. Without goals, spending can get out of hand. I find people are more impulsive in their spending and lack focus in their spending when they don’t have goals. It is natural to spend more on unnecessary items when you don’t have a goal.
Setting financial goals may seem daunting but break it down into three categories and it becomes easier.
Three different goals to consider, as an individual and with a partner if you have one are:
1. Short Term – Achievable within 1 year
The most important short-term goal is to have a rainy fund, emergency fund, what ever you want to call it. These funds will cover you if you find yourself short to cover an unexpected cost or an unexpected loss of income. An example would be an unexpected vehicle repair or loss of income due to a medical issue. A guideline would be to have 3 months worth of expenses set aside.
2. Medium Term – Achievable within 1 to 5 years
Medium term goals can be the fun goals. Maybe there is a vacation you want to take or a large purchase you want to make.
3. Long Term – Achievable within 5 to 10 years
With long term goals you want to think about down payments, retirement savings or educations savings for your children, or a combination thereof.
The first thing to do is to value the goal. For example, if you wanted to save for a new vehicle without having to get a loan, the first thing you need to do is figure out the make and model you would like and then start visiting websites to determine the cost. The next step is to set a deadline on when you need this vehicle (3 years or 5?). Then you can take that cost, for example $10,000 and divide it by the number of months you have to save it. For this example, let’s say 48 months. That would be approximately $210 per month. If you look at your cash flow, you may be able to save it faster or slower depending on your current situation. Adjust the goal to suit your cash flow and eventually you will realize on it. You are much more likely to meet the goal if you do this exercise.
Take some time to think about your short, medium and long term goals and write them down. You should notice that your spending naturally becomes more focused.
If you are unable to meet your financial goals because you are carrying too much debt, contact D. Thode & Associates Inc. today to find out your options and loosen your cash flow so you can start making plans for your future.
To find out more about the options available to you, contact D. Thode & Associates Inc. today to take advantage of our free consultation.