Finance Rules to Live by to Help you Reach Goals
It is important to have goals in life. They give you something to work towards. They give you a purpose and something to achieve. While that is true, goals can be a tricky thing. When set properly, they can be a motivator, urging you on to completion. When set without proper thought, they can become blockers. When a goal is too difficult, it can become frustrating and make you want to give up.
Setting goals for yourself is important, but making sure they are attainable is equally as important. Continue reading this article to find out more about setting proper rules and guidelines, or rules, to get you there.
Create Your Goals
It most likely goes without saying that before you can create your own rules to live by, you first need to create goals. You really should take the time to understand what you really want. It has to be what you desire for yourself. Your goals cannot be what someone else wants for you. You cannot create goals based on someone else’s dreams. That just will not work. There is not enough motivation to keep you moving towards the goal(s) when they are not your own.
Think about the things you want…pay off debt, build solid savings, save for retirement? Perhaps your goals are all of those. Or maybe your financial goal is turn earn $1 million before you are a certain age. No matter which they are, make sure they are yours. You need to think about how long you want it to take you to reach these goals and set timeframes to get there. Remember, they may be reasonable, attainable, and measurable. If you want to save $1000 in one year, how much money do you need to save per month? Per week? Write down your goals and your check in points that make sure you are on target.
Our Old Friend, the Budget
Just about every article or blog you read related to finances will mention a budget. There is a great reason for this. It is important. Creating a budget is one of the single most important things you can do for yourself, financially. That is not an exaggeration. No matter what goals you created above, a budget is going to help you get there. One of the most important rules to live by is to create and stick to a budget.
There are many different budget options available, from the simplest to the most challenging to maintain. One of the easiest types of budgets is to give every dollar you earn a job. That means you have every penny budgeted to go somewhere. That could include your saving account or your grocery bill. The idea is that you do not have any money left sitting in your checking account at the end of the month. This may be easier on paper but could be a little harder in reality because of how money for bills moves out of your account, but this is a great place to start when creating a budget.
Do Not Be Controlled by Credit Cards
Credit cards are an amazing financial tool when used properly. They provide a way for you to purchase an item right now without having to pay for it. They also give you protection when you purchase an item. If a false charge is created on your credit card account, it is not your actual money that is being held. However, proper use of a credit card is key. One of the most important rules to live by with credit cards is to make sure you pay them off.
Ideally, you will pay your credit card bills off each month. That means you pay the entire balance in full when you get the bill. You will not face finance charges. You will not have to deal with a balance that creeps up getting closer to out of control. You may find that it is impossible to pay off your credit cards each month. You must pay at least the minimum balance on time. If you do not pay at least this much, it can hurt your credit score and put you in a place where you cannot easily catch up.
Do Not Forget Savings
When you are focused on paying off debt first, you may overlook your savings account. You must work on building that, too. Your savings account is what may save you when you reach moments of financial trouble. If you lose your job and are out of work for a month, you will need savings. When you find that you have an emergency that requires cash quickly, you will need a savings account.
You always want to pay yourself first. Even if you can only manage 10 percent of your paycheck each month, that is a place to start. You want to work on building up an emergency fund that is always there in case you need it. When you think about how to start saving, one answer is to create a healthier savings account by sending money to an account automatically. This way, you do not have to think about it. Each month, or whatever schedule you set, a set amount of money goes to your savings plan. If you move money to savings as soon as you earn it, it does not hit your checking account; therefore, you never see it as money that is yours to spend.
If you don’t know how to start saving, maybe we can help you. You can choose the amount of deposit below, and check savings account options:
Invest
The thought of investing money is challenging for people. Some people see it as a dangerous way to use their money. Others do not understand how to invest money and are intimidated by it. With all the talk about the volatility of the stock market, it is easy to understand why you might be afraid to put your money there. However, if you learn a little bit about it, you understand how it works.
You may no longer be afraid of it. You do not have to invest large sums of money, not at first anyway. Invest a little bit at a time as you are learning the process and how it works. It is important to understand that you probably are not going to be an excellent stock trader. You may become good at it, but it is rare for people to make millions and retire unless they have millions to start with. Take some time and learn how to buy and sell a stock.
Your Credit Score
Maintaining the health of your credit score is critical. This is the gate keeper to better interest rates and being approved for credit. When your credit score drops, you become a risky candidate for credit. The best way to understand your credit score is to look at it. You can put your credit reports annually. You should and review them. You want to understand your credit score and determine how to improve it, if necessary.
Key ways to keep your credit score from dropping, or to improve it, is to pay your bills on time for the minimum amount. Another way is to make sure that you are not carrying too much debt. When you pay off your credit cards each month, that is an ideal way to limit the amount of debt you carry. If you have loans, you want to make sure you pay them off as soon as possible. If the debt does not serve you, you want to pay it off quickly.
Understand Your Lifestyle
Spending too much money, or rather, spending more money than you have, is a bad habit. This means you cannot afford your lifestyle, and you need to tone it down. If you are using your credit cards all the time, and you are not able to pay off your cards at the end of the month, you should stop spending money. If you find yourself digging a deeper hole of debt, you should stop spending money. Creating a budget will help you see all the areas in which you spend money. It will highlight the items that you need to stop buying, such as going out to lunch every day.
One of your top rules to live by is to stop buying items you cannot afford. It sounds simple, right? It usually is not. There could be many reasons why you are making purchases you cannot afford. Perhaps, you think they are necessities. Perhaps you want to dress like all of your friends. Perhaps you want to hang out in all the places your friends do. These things are problematic when you do not have the income to support these behaviors. This is when you must curb your spending.
Care For Yourself
While this one may not seem like it is related to finances, it is. Studies have shown when you care for yourself with proper nutrition and exercise; you have fewer health problems. This also means you spend less money on doctors, medicines, and other procedures. While it does take some money to eat well and care for yourself, it takes less money. Over the long term, when you care for your health, you spend much less money than when you are always feeling bad. Not only is caring for yourself beneficial to your wallet, but it is also good for you, in general. When you have poor health, your insurance can go up, or it may cause you to miss work. Missed work may equal less pay. You may have to retire earlier than planned, which could mean a lower monthly amount on which you can live.
Get Expert Advice
You do not have to set your goals by yourself. You are not alone in this process. There are many resources available to help you along the way. The Goalry Mall is a great place to start. We have provided excellent resources online to help you set goals and keep them. We can analyze your current situation and help you create goals that get you closer to achieving financial independence. Not only do we help you create reasonable goals, we have them available to see at any time. We help you track your progress, and you are able to see how close you are getting to motivate you forward. When things become challenging, we help you remember your why, why you set these goals in the first place.
Conclusion
Goals-based wealth management may seem difficult at first, but it is much easier than you realize. The most difficult part is getting into the habit. Creating habits that seem unnatural to you is tough. However, once you start seeing positive results, it will get easier for you to stick to your own plan. There is nothing more rewarding than seeing your savings grow and your debt decrease. You have already taken the first step by reading this article. Take the next one by thinking about those goals and writing them down.