A goal in the road of life.

Tips For Reaching Your Money Goals

The last two years have been rough ones for many Americans and because of this, you might be looking to change your money or financial picture. This could be starting an emergency savings account, balancing your budget or finally hammering down your retirement plans. No matter the case, here are some tips that can help you reach your goals.

1) Have Clear Goals

If you are going to spend time and effort working on a goal, it pays to know exactly what that goal is.

One goal might be to simply retire, but that is vague at best. When do you want to retire and once retired, what do you want to do with your life? Is traveling on your mind, do you want to relax at home or perhaps you want to start a new career? You need to be specific with your goal so that you can commit the resources you need to accomplish it.

If your goal is to start an emergency savings, how much do you need? For most people, 6 months of expenses is the goal for an emergency fund, but what is yours? Once again, you need to be specific if you are to have any homes of reaching your goal or goals.

No matter what your goal is, you can not reach it if you do not know where the finish line is. Set a clear monetary goal, so that you can make a clear and concise plan as to how to reach it.

2) Time To Save Or Invest

Once you have a clear finish line, there is typically one thing that is going to allow you to reach it, money. It is time to start saving or investing to get the funds that you need.

If savings is your goal, simply open an online savings account that is separate from your normal checking account. You need this separation in order to keep your funds from co-mingling. It is far too easy to raid a savings account that is linked to your checking with instant transfers. Online accounts are still accessible, but it takes a full business day for a transfer to go through. You can make this a cooling off period that will keep you from making impulse purchases.

For those of you who are looking at long term goals like retirement, an investment account should be your target. The kind of account that you set your sights on will depend on a lot of things such as your age, when you want to retire and what level of retirement that you want. With all of the variables involved, you really need to consult a local investment professional for personalized advice. Since all investment account come with some sort of risk, they can help you match the risk level to your particular situation.

3) Pay Down Revolving Debt

Now that you have a savings or investment account, you need to find some money to fill it. The best way to do that is to eliminate wasted money by paying down high interest debt.

How much interest are you paying every month on that debt. If you are carrying 5,000 dollars or more in credit card debt, it is substantial. At 20 percent interest, you are paying roughly 1000 dollars a year or close to 100 dollars a month. That is money that could substantially boost a savings or investment account.

To get rid of that debt once and for all, pick a debt reduction method Like the Debt Snowball or Debt Avalanche method. The difference with these credit card debt reduction methods is that with one you pay off the lowest balance cards first and with the other you pay off higher interest cards first. If you need the motivation of a card being completely paid off quickly, pick the Snowball method. Should you want to use your money in the wisest way, choose the Avalanche method which prioritizes higher interest debt. Choose the method that appeals most to you so that you will stick with it.

4) Audit Your Budget

Once the credit card debt is handled, where else can you look for money? No expense is safe when you are looking to maximize your savings, so take a look at your regular budget for answers. Almost every budget has some fat that can be trimmed.

Take your budget out and take a good hard look at it, and if you do not have a budget, now is the time to create one. Once you have a budget in front of you, go down the list of expenses and look for ways to save. This might mean shopping your auto insurance policy, looking for a cheaper internet provider or even making a big change like finding more affordable housing.

When auditing a budget, there is almost always a way to save money. You can cut things a little or you can make drastic changes. It all depends on how far away you are from reaching your financial goal.

5) Consider The Little Things

If you have squeezed the budget as much as you possibly can, there still may be places to look for money. Now, it is time to look at the little things and the long term financial affects that they can have. You might be surprised at how much tiny expenses can make an impact over the long term.

Take the classic example of your morning cup of coffee. If you buy it at a store, you are likely spending 3 to 4 dollars a cup. A trivial expense until you stretch it out over time.

That 4 dollars a day is roughly 100 dollars a month or 1200 dollars a year. Over the course of 20 years, that is 24000 dollars. With compound interest, that is over 40,000 dollars in that same time. Quite a bit of money.

There are  number of expenses that can have just as much impact as a morning cup of coffee. Expenses like a daily fast food meal, taking the toll way to save a few minutes of driving or downloading apps with careless abandon. A dollar here and a dollar there really add up over the long run.

Take Action Now

Above all else, you need to take action if you have financial goals. For most people, things will not just come together, so you need a plan.

Luckily, planning for the future is not that hard. Just come up with a goal and that should help you come up with a dollar amount that you nee to reach. Once you have this number, simply take the time that you have left to calculate how much you need to save annually.

After that, it is simply a matter of making changes to your budget to make it all happen. This might involve making sacrifices, but in the end, it will be worth it.

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