When people imagine their future, some think of using their money to live their lives to the fullest. Unfortunately, others are anxious because they believe they won’t be able to afford their desired lifestyle in the future.
If you are worried about your financial future, you are not alone. Whether you want to save up for a business, a house, or your retirement, you can attain this through financial planning. But before working toward anything specific, here are several short-term financial goals that can get you started:
1.) Establish a Budget
Setting a budget may seem like the most obvious step when setting your financial goals, However, you might be surprised by how many refuse to do this. If you are one of them, you are likely to find yourself fumbling in your pockets every end of the month, looking for some change or hidden bills.
It’s easy to spend money mindlessly and get shocked that you no longer have enough funds for your expenses. Aside from having a budget, make sure to track your spending. You can create a budget the old-fashioned way by going through your bills or bank statements and categorize each expense. On the other hand, you can use a budgeting app where you can easily input information from all your accounts into one place to label each expense by category.
2.) Build an Emergency Fund
Unexpected situations that require a huge amount of money can happen at any time. For example, your roof may need immediate repairs, or your loved one has to suddenly undergo a medical procedure. In instances like this, having an emergency fund can help. This is money set aside to pay for unexpected expenses. Without it, you likely need to borrow money in times of crisis.
To illustrate the importance of an emergency fund, many people experienced unemployment due to the pandemic leading to financial uncertainty. If you didn’t have an emergency fund prior to this health crisis, you likely wished you did. Meanwhile, if you did have one, you may have tapped into it to pay for daily expenses and need to replenish it now.
When building an emergency fund, it must cover at least three months’ worth of your financial obligations and basic needs. However, if you are married, it has to be at least six months’ worth. If you need further assistance in determining the ideal amount of your emergency fund, consider working with a financial planner.
3.) Pay off Debts
To properly track your overhead costs, list all your debts by interest rate from lowest to highest. Afterward, pay only the minimum on all, except the highest-rate debt. Finally, use the remaining funds you have to make extra deposits on the highest-rate debt.
Another method for paying off your dues is the debt snowball. It involves paying off debts from smallest to largest, regardless of the interest rate. This aims to give a sense of accomplishment by reducing the amount of financial obligations you have. Eventually, this will encourage you to tackle the debt in line until you become debt-free.
Planning your future and trying to achieve financial security can be overwhelming, but it’s a lot easier when you take one step at a time. Start small by meeting these short-term goals. Attaining all of these can help you live your desired lifestyle in the long term. To receive further assistance when handling your finances, partner with a certified financial planner.
Calamita Wealth Management is a certified financial planner in Charlotte. We provide comprehensive financial planning and sound financial advice to help you meet your financial goals. Contact us to schedule a consultation!