If you’re like most people, you have a bucket list – that list of hopes, wants, and dreams you would like to accomplish during your lifetime. Some of the items on your list may be practical, such as paying off your student loans; others may be more adventurous, like taking an exotic getaway. Others still may be ambitious but attainable, such as purchasing the home of your dreams. Whatever the case, most of the entries on your bucket list probably share one thing in common: they require money.
The good news is that, by setting realistic financial goals for yourself, you can save the funds you need to start checking the items that are most important to you off your bucket list. By following a few simple tips, you can hone in on your financial objectives, figure out how to reach them, and turn those hopes, wants, and dreams into realities.
Create Your List
Again, if you’re like most people, you may have a bucket list, but it may exist only in your head. If so, take the time to sit down and compile a list of everything you would like to do that requires money. The list should include anything you can think of, big or small – from weekend getaways to your retirement plans.
Once you have your list put together, it’s time to prioritize. Review each item on your list and ask yourself whether you are willing to postpone fulfilling other goals to reach this one first. If the answer is no, you can move that goal down the list.
Get to Know Your Spending
Have you had trouble saving money in the past? If so, you’re not alone. A recent study by the Federal Reserve found that nearly half of Americans wouldn’t be able to put together $400 in an emergency.i
Understanding how you are spending your money each month is essential to reaching your financial goals. Review your monthly budget to determine where you can make cuts and adjustments and potentially set aside more money for your savings.
To help you manage your spending, you can use a money tracking system to find out where you may be going over budget. Try cutting back on unnecessary expenses wherever possible; for example, you can pack a lunch during the week rather than going out. You may be surprised by how quickly a little belt-tightening will help you to reach your short- and long-term financial goals.
Work toward Your Financial Goals
Now that you are better acquainted with your budget, you can take your prioritized list of goals and start to figure out how you are going to reach them. Begin by focusing on your top five goals and addressing each by asking a few key questions:
- How much do I need to save to reach this goal?
- How quickly do I want to reach this goal?
- How much money can I realistically afford to put toward this goal each month?
These questions can help you establish how much money you should put into your high-yield savings account each month. Suppose your intention is to save $3,000 in six months for a down payment on a new car. To achieve this goal according to your timeline, you would need to set aside $500 each month in savings. You may need to adjust this goal based on what you can realistically afford, but at least you will have a concrete idea of what you are trying to achieve.
Set Yourself Up For Success
You’ve figured out your budget and set target dates for your goals. Everything seems to be going according to plan. Then at the end of a particularly trying month, you discover there is little or even no money to set aside for your savings.
Emergencies and necessary purchases that could not have been foreseen can transform your budget. Don’t let a rough month or two discourage you from saving. If you find yourself regularly dipping into your savings, try setting up a separate account for each of your goals. Set up an automatic transfer so that every payday a portion of your income is placed into each account.
Your financial goals will continue to evolve throughout your life. Continue to reevaluate your budget every few months and be flexible as your priorities change. However, these budgeting and savings tips will always remain relevant. By following them, you will set yourself up for short- and long-term financial success – and your bucket list will become shorter by the year.
“Why Don’t Americans Save More Money?” The Atlantic. http://www.theatlantic.com/business/archive/2016/04/why-dont-americans-save-money/478929 April 19, 2016
"How to Set Financial Goals - And Reach Them"
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