If you read our Budgeting Goals page, you know how setting goals works in your favour while budgeting. SMART Goals allow us to control and be specific about what we want to achieve. In finance, there are other aspects to consider while setting a goal. After all, we are dealing with money and some plans and dreams take more than others.
That being said, here some important points to financial goals. They are made up of:
- Small to big (inexpensive to expensive)
- Short-term to long-term
- Guessing at the savings
- Figure out the savings
- No real plan - just savings
Of course, everything is subjective compared to the overall budget. For some people, getting a used item needs to be saved for while other people want the luxury version.
Small to Big (Inexpensive to Expensive): this will depend on your disposable cash situation.
Disposable cash is basically what is leftover from your income after paying bills and buying items with cash. With credit cards, cash is less and less used. In order to save some funds, it may be necessary to find less expensive things to pay for.
Your disposable cash will start small, however, if you keep your finances under control, eventually it will grow to allow you to use it for some expensive plans.
Short-term to Long-term: in finance, when we talk about savings and time, short-term is less than a year. After this period of time, everything is considered a long-term goal. The length of a goal will only matter if it is time-oriented (eg. Save for college or retirement). Emergency funds, however, are constantly ongoing. Being specific about your goals though is always a good control skill which gives you the opportunity to be realistic and reach the objective at your own pace for your satisfaction.
Guessing at the Savings: what happens when the amount of savings doesn’t really matter. Here is the scenario: every month you save some money that goes straight to your Savings account. Then, after some time you have a good cushion and decide you want to travel to Europe. It might take some time to choose the destination, the month and the duration of your trip, but you’re already well on your way to having the money to make it happen, so it becomes a no-brainer financially.
Figuring out the Savings: here is the opposite of the previous situation. Now, you are going to plan for something. The first step is to figure out how much money you will need to this goal. Again, let’s use the trip to Europe as an example. A good Saving Planner, one with proper relevant material, will help you gather all the information needed and the costs involved to visit Europe. Once you have all the costs, it’s time to start saving. Set a time frame and begin. A car is another good example to address saving planners.
No real plan: simply save. Put aside a certain amount of money every month. If you have more, increase the amount. After a period of two years, you may be surprised by your savings account. If no plans are decided in the near future, the money will eventually help you with a big plan such as a wedding, a boost in your education, up-date your home. Savings make sense. Trust us!
In summary, for any savings goal or goals, the amount to save may not be reasonable enough so some adjustments will have to be made. Either shorten or lengthen, as long as you keep saving each month, your chance to achieve your goals become real and easily attainable.
Keep Saving!
Review: KJ/DB