Setting Goals That Will Boost Your Household Finances
Household finances are a common bone of contention. Even families who command great salaries and enjoy good job security can find themselves worrying that their household finances could be better. They try to budget, they try to save, they try to plan with the future in mind, but their efforts always fall flat. Why? Is it because they’re needlessly indulgent, poorly disciplined or reckless? Of course not. Very often, the reason why families falter in their finances is because they do not have strong and specific financial goals.
Goal setting is extremely important in all areas of life, whether it’s in business, work or your career, whether in your weight management and fitness or personal or spiritual development. Goals are great because they keep us on track, give us motivation, keep us on the straight and narrow when we waver in our conviction, and they help us get a sweeter sense of reward when our goals are achieved. But goal setting isn’t easy. Get it wrong and you’ll find yourself faltering again and again, getting more frustrated and apt to quit every time.
Here we’ll look at some easy and workable steps that you can take towards setting financial goals that will help your household on the way to financial well being…
Setting and meeting your financial goals is a lot like making the commitment to get in shape. It needs to begin with a spark of inspiration. This can be either a positive or a negative thing. When we make a commitment to get in shape it may be because we’ve seen a celebrity with an enviable figure that we’d like to emulate or because we’ve caught sight of our reflection in a car window as we walked past and did not like what we saw.
What’s your inspiration for setting your financial goals? Do you have something specific in mind like a family holiday or a brand new 4K home cinema setup? Do you want to upsize to a bigger house or take the first step on the property ladder? Or have you faced an adversity like a bad credit report or a loan rejection which has made you resolve yourself to right the ship.
When you’re genuinely inspired, you’re far more likely to be emotionally invested in improving your household finances which means you’re also more likely to follow through on your commitment.
Get the financial lie of the land
It’s impossible to set worthwhile financial goals if you are unaware of how your current financial state lies. In much the same way as you can’t accurately chart your weight loss until you bravely step on the scales and prepare yourself to be mortified. All too often, we make poor financial decisions because we bury our heads in the sand when it comes to our household finances and particularly our debts.
Even if you don’t yet have specific goals in mind, it still behoves you to get a clear and realistic idea of your household finances. Putting a budget in place is one of the most effective ways in which you can right the ship. The great thing about establishing a budget is that it makes you think really hard about what’s going out of and coming into your bank account. Even if you don’t want to itemize every single penny coming through your home it’s a good idea to at least…
Get your spending under control
Getting your spending under control is much easier when you have a household budget in place. But if this is too arduous a task for you, there are still measures you can put in place to reign in impulsive or irresponsible spending which could derail your goals. Try to stick to the 50/30/20 ratio whereby;
- 50% of your income goes on your household’s basic needs
- 30% goes on wants
- 20% goes towards savings and repayment of debts.
Another useful strategy is to invest in a little notebook. In this notebook you will write down your every expenditure. Yup! Everything. From the monthly rent to the latte you treat yourself to on the way to work every Friday. From the grocery shopping to the bar of chocolate that helps you to relieve the stress of a busy Monday. Everything goes in the book. Far too often we look at our bank balance with shock and surprise, wondering where all our money went. Rarely is it because we’ve been particularly indulgent. It’s usually just lots and lots of little expenses that all add up. Logging every purchase makes us think a lot more about where and how often we spend.
Set SMART Goals
You may well have heard of the SMART approach when it comes to goal-setting. While it usually pertains to business management, it certainly lends itself well to financial planning. When setting goals it helps to ensure that they are…
- Specific- Made with a specific purchase or monetary saving in mind.
- Measurable- You can keep yourself motivated by checking and measuring your progress.
- Achievable- They aren’t just pipe dreams, they’re actually achievable goals so that you can allow yourself the pleasure of achieving them. If you aim to move to a new property, use a mortgage calculator to ensure that you can afford to live in your dream home. Or calculate how long it will take you to save for an appropriate down payment.
- Realistic- You may well want to become a millionaire, but how realistic is it on your current career trajectory?
- Time-bound- By when would you hope to have achieved these goals? Setting time bound goals can help you to stay motivated and accountable.
Don’t be afraid to treat yourself
Just like any personal trainer will tell you that treating yourself to a cheat meal once in a while is an integral part of a balanced diet. It helps to keep cravings at bay and kickstart your metabolism. So too is it important to treat yourself every once in a while and enjoy your money. Treats should be manageable and regular. A book once a week or a big meal out once every other week will prevent you from getting frustrated and allow you to enjoy some quality of life even as you work towards your goals.
When you set appropriate and achievable goals for your household finances, you’d be astonished at what you can accomplish.