I’ve got an awesome guest post for you today from Kathy Mason, a Finance Coach and Blogger! I’m excited for her to share her wisdom on the keys to financial freedom and how to set up a great system for success! Enjoy! ~ Mr. Jamie Griffin
Whether it is getting out of debt or beginning to start a nest egg, setting fixed and achievable goals should be your first step.
Below are 5 tips to getting you started in moving in the right direction:
1. Set Goals Immediately
Delaying when it comes to your finances is never a good idea. With this in mind, the initial stage should be you identifying what you seek to accomplish and putting together a plan. For example, if you are looking to pay off debt, you should identify the total amount of debt and then figure out how much of your income you can carve out to pay down the same. In this same vein, if you are looking to start saving you should assess how to get to the point where you are able to set aside a specific amount each month to be put in your savings account.
2. Tier Your Goals
You are not alone when it comes to the fact that you have multiple goals. Most people have multiple goals they want to accomplish. The key to success, however, is prioritizing these goals so that you address the most important ones first. Let’s say you have $2,000 worth of credit card debt but also need a new car. Both goals are important but you need to evaluate which is more pressing. While instinctively you may decide that paying off debt should always be a priority, if the car you have is so unreliable that it is causes you to miss work or arrive late and this jeopardizing your employment, it may be more prudent to save up to replace the car and put paying off the debt in as a “second tier” priority. With that said, if the car is a luxury or if public transportation will allow you to get to work (even if not your preference), then paying off the debt before buying a car should be accomplished.
3. Challenge Yourself
If you have debt and that debt is accruing interest, maintaining the status quo is simply not an option. You need to challenge yourself and evaluate your day to day decisions. While no one likes making sacrifices, part of what you may need to do is forego things that you are currently doing. For example, things like making dinner at home or bringing lunch to work may not be your preference but if you can start squirrelling away a little more money each week than this should be what you do. Once you calculate what you will save by these steps, you need to take this newly freed up money and apply it to your goal. In other words, the “extra” money must be used to pay off your debt or depositing in your savings account and not simply used for another discretionary purpose.
4. Automatic Payments
Any time you can eliminate the need for you to be proactive when it comes to paying off debt or saving money, you should do it. While your personal willpower to accomplish your goals is no doubt strong, if you can simply have your checking account kick off a monthly payment to your creditor or transfer money into a separate savings account you will be better off. If you can simply “set it and forget it” when it comes to your goals you will be surprised how easily you will adjust to implementing the money transfers.
5. Do Not Get Discouraged
It is easy to look at your finances and feel like your goals are too difficult to accomplish and in doing so convince yourself to not initiate the undertaking. This is the single biggest mistake you can make. Your goals are 100 percent within reach and while the first steps to evaluating and recognizing how to get yourself there can be intimidating, that is not an excuse not to act. Truth is that you simply need to be honest with yourself, figure out specific ways to cut back on your current expenses and activities and apply this “saved money” to your pre-set goals.
Let Me Know What You Think
What helps you stay focused on your goals? How do you prioritize which goals are most important to pursue?
Kathy Manson is a Finance Coach and Blogger. Currently, she is working at http://www.catalinastructuredfunding.com. She is very proactive and aware about each and every update of financial changes in the industry. On Twitter @ structuredfund.