WinCU Family & Friends Blog
Tips to Reach Your Financial Goals
My husband and I are pretty goal oriented and we worked hard to get where we are now. Our immediate goals were to graduate from college, buy our first home and starting a family. So far so good!
Along the way, I’ve learned a few things I’d like to share to help you achieve your financial goals.
The first tip is actually the most important tip of them all. In order to achieve your goals, you first HAVE TO SET goals. Sounds easy right? Having a clear picture of what you want to achieve is very important to doing so.
Now a few tips about setting your goals. Start simple by setting an achievable goal. Trying to become a millionaire in a month probably isn’t realistic. But, you can set the goal to start a savings plan, or pay off debt.
Most personal financial matters start with the same step. Accurately determine how much you are spending and where that money goes. It’s time to get organized and start reviewing all of your accounts, including checking, savings, credit cards or other debts. Put together a list of where all your money is going on a monthly basis. This will give you a better picture of your overall financial health and will help you keep track of your expenses and find some spending leaks. Most people fail because they spend aimlessly and hope it all works out at the end of the month. Once you review your spending then set goals, or budgets that make sense for your situation.
Most of us have debt…but do we understand the true costs? Know what the interest rates are and what the interest expense is every month. You should review your loans and credit cards to make sure you are getting the best deal. High interest rates can be devastating to achieving your financial goals. Lenders at Winnebago Community can help you understand this with a free credit review.
Once you review all of your debt, look at ways to reduce your highest interest loans. This is where you could shop around for a lower interest rate credit cards or refinancing your debt to lower interest rate. If neither of those are a possibility then you want to try and pay that debt off first by increasing your monthly payment on that account.
The next tip is you want to build a strong credit report. You can sign up for companies like Credit Karma or a similar monitoring service that provides you your score. It is very important to know your score and understand what makes up your score, but one of the most important things you can do is ALWAYS pay your bills on time. This means even if it is the minimum payment you want to make sure you pay on time. A difference between a 600 credit score and a 750 score can mean hundreds of thousands of dollars over a lifetime, as better credit scores will be eligible for better interest rates. So take care of your credit.
Once you understand your debts, spending habits, your credit and you have set your goals now you can start a savings plan. Remember start small, you want to make something manageable to start building a savings. If it’s something specific you are saving for nickname the account that way every time you look at it, it reminds you why you are savings.
A great method to start saving is automate it. This means set up an automatic transfer to make sure the transfer happens. The best way to do this is to link it off of your direct deposit if you have one. So if you have a $200 direct deposit going into your checking every month have $25 of that $200 go directly to a savings account.
Also, be sure your savings plan helps build an emergency fund. No matter how well you plan ahead, life always has a way of throwing you something unexpected. By building a small emergency fund you will be better able to handle the unexpected expenses without throwing your overall saving plan off track too much. I recommend building up the small emergency fund to $1000 - $2000.
Finally, the last tip for achieving your financial goals is consistently review your plan. We all know your income and expenses change frequently so review your budget and goals frequently. If you are not hitting your goals reassess them and figure out why, if the budget seems to easy tighten it up a bit and give yourself a bigger savings goal. Don't let yourself get discouraged if you don't at first achieve your goals. The people who succeed are the people who can push through adversity.