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The Power Of Planning

Making money – and spending it – can feel very rewarding. However, saving can help you reach many of your future financial goals. Setting financial goals is a smart choice and can be very rewarding. When you set a financial goal, you define what you want and develop a plan for achieving it. Instead of spending aimlessly, you have something to strive for and a clear path for getting there. Here are a few basic places to start when you begin setting financial goals.

 

 

1. Define your goals.

What do you want? Some common financial goals are:

 – Contribute to retirement plan

-Save for a down payment on a home

-Save up for a large purchase such as a car, boat, or computer

-Set aside money for travel.

Make sure you write these goals down, and keep them somewhere visible. For example, if you do a lot of online shopping you could tape your goals to your computer screen. Keeping them there will help keep you on track financially, instead of making impulse purchases.

2. Be specific, but Reasonable

Define and amount, a time frame, and what the money is for in your financial goal. Make sure to set a goal that is reasonably attainable. You can always revise your goal in the future depending on how you are doing with your plan. For example, I would like to save up to 20,000 within the next 10 years for a down payment on a house.

3. Prioritize

You may have a lot of goals. After you write them down, prioritize them. This will help you develop a plan of action you can stick to.

4. Develop a plan of action

After you define and prioritize your goals, come up with a plan on how to meet your goals by working with your monthly budget. For example, if you want to save $1,000 for a new TV over the next year, see if you are able to set aside $84 monthly towards that goal. Most bank accounts will allow you to automatically transfer over money from a checking to savings account monthly.

5. Don’t forget interest

Do some research, and open an account that will allow you to earn the highest rate of interest, increasing your savings faster. If your goal is to pay something off, put extra money towards loans or credit cards with the highest interest rate first.

6. Commit yourself to your goals

You probably have to make some trade-offs in order to meet your financial goals. Maybe you want to go to Italy for a week and you also want yo save for a house. Weigh the importance of each goal and commit to meeting your milestones. Many times you can still reach both goals, it may just take a little  longer than you originally planned for.

7. Review your progress

You can periodically check to see how you are doing with meeting your financial goals, this will allow you to make adjustments as necessary. However, checking frequently and seeing a large amount in savings can be tempting. Keeping a list of your goals visible as stated in #1 will help you resist the urge to dip into your savings.