By Miriam Caldwell
Updated December 12, 2016
There are some people that love setting goals and do a great job reaching them every year, and then there are others who set goals and struggle to make them happen. If you are tired of living in your current situation, but you feel like setting new financial goals will not make a difference, you should try setting up a financial plan instead of setting goals this year. Your financial plan will outline what you need to do and when without the drastic changes that often come when you set goals that may not be achievable.
The best part of having a financial plan is that it keeps you focused on moving forward, even after you reach the goals that you may have set for yourself.
Benefits of a Financial Plan
Often goals will deal with one specific area of your finances, which is fine if you need improvement in budgeting or getting out of debt, but then you are left wondering what you should tackle next or the goal will not benefit you in all areas of your life. The financial plan provides your next steps. It also takes the pressure off of one area that you may be struggling in and lets you focus on the big picture, which may help you with improving your budgeting skills or getting out of debt.
Setting Up Your Financial Plan
In order to start setting up your financial plan, you need to start by thinking long-term. This may go as far as when you want to retire and how comfortable you want to be. If that is too intimidating right now, look at where you want to be in the next five or ten years financially.
Do you want to purchase a new home in that time? Do you want to have a different job? Are you going to start a family or send a child to college? Knowing the answers to these questions can help you determine the path you need to take to be able to achieve those dreams.
Break Down Your Plan Into Manageable Steps
Once you have identified your needs, you can break down the steps that you need to get there.
For example, if you want to purchase a home, you will need to reduce your debt, and save up for a down payment on your home. It helps to assign a timeline to this part of the process, because it will help you to keep moving forward, but if you reach a step early, you can simply move onto the next step as soon as you reach it.
Make Sure You Are Budgeting
Your budget is the key to the success of your financial plan. Your budget will let you see how much extra money you have to set aside for these goals. It will identify problem areas when it comes to spending or it may show that you are not making enough to reach these goals. This will let you fix these problems and make adjustments so that you can pay down your debt and start saving for the future. It makes a huge difference in rather or not you can reach those goals. If you need help budgeting, you should consider using software like YNAB or Mint that allows you to track your expenses and set goals for yourself. You may also consider taking a budgeting class that will work with you to set up a realistic budget for your current situation.
Ask for Help From the Experts
If you want to invest money for your children’s education or retirement, find a financial planner who can help you set up a solid investing plan.
If you have spending issues, you may benefit from attending a support group. If you feel like you need to improve your current job situation, consider getting additional training. There are so many resources available to help you as you work on your financial plan, and if you have a question, it helps to find someone who has the expertise to help you.
Adjust Your Financial Plan as Needed
Situations change, and the timeline you currently have in mind may not work out quite the way you were hoping it to. Things may be sped up or they may not happen as quickly as you like. You can continue to prepare so when the time is right, you are ready for the next step in the plan. Be sure that you are always saving for retirement no matter what stage of the plan you are working on, and you should be able to change your financial situation without the stress that may come with setting goals.
source - thebalance