How to Set Clear Cash Goals for the Future

Posted in Budgeting on December 29, 2020

We all know deep down that budgeting is a good idea. When you know how to split your cash into different categories each month and divvy it between the various demands in your life, you can make better decisions about your future. People who have a good relationship with their finances are also less likely to end up dealing with debt and other issues that can seriously harm quality of life.

Unfortunately, getting started with a financial plan is easier said than done for many of us. Most people aren’t taught how to make the most of their cash when they’re still in school. The majority of us struggle to make good decisions about where our cash should go because we’ve had to simply make it up as we went along.

The good news? Starting with some solid goals can be like giving yourself a compass that guides you towards success. Today, we’re going to guide you through the steps you can take to set clearer cash goals for the future.

1. Define Your Why

First things first, ask yourself why you want to have clearer goals for your money. Maybe you’re tired of always having to take out loans when you want to buy something – no matter how useful they can sometimes be. Perhaps you want to save up for something important that you want to do in the future, like a big trip, or a wedding. We all have motivations for saving that generally go beyond wanting to be better with our money.

Figuring out what motivates you to make better purchasing decisions will help you to find a crucial point of inspiration, ready to guide you towards future choices. Once you have your goal, you can find a way to remind yourself of it as often as possible. For instance, if you’re dreaming of saving for a family home, print out a picture of the kind of home you want to live in and place it on your fridge.

It might sound odd but having that visual reminder of what you want to achieve can be a great way to stay inspired when things like budgeting get difficult. You can also make vision boards, or even have a chart that you add a star to every time you hit a major milestone.

2. Think Long Term and Short-Term

Goals come in two different forms most of the time. First, you have your long-term goals – the things that you want to accomplish a decent way in the future. For instance, you might decide that eventually you want to have a full 20% deposit for your dream home. Unless you’re very lucky, it’s unlikely that you’re going to accomplish this goal overnight. However, you can place it in the future to give you something that you can look forward too.

Unfortunately, setting just long-term goals can make it harder to maintain your motivation. You don’t make a lot of profess towards these goals very quickly, so it’s hard to see that you’re really getting somewhere. Having some more short-term goals in place too can help to give you the emotional boost you need when it feels like you’re miles from the finish line.

For instance, if you decide that you want to pay off all of your debts in the next five years, start by planning how long it’s going to take you to pay off that first credit card. Maybe you can have most of that expense paid off by the end of the year, or half of it paid in the next six months. Whatever you do, don’t just budget with the vague concept of wanting to save some money.

3. Be Realistic

If you’re an ambitious and hopeful person, then you’ll know how easy it is for goals to get a little out of hand. You end up thinking that you can accomplish amazing things from willpower alone, but this is rarely the case. Instead, you should be thinking about what you can realistically accomplish, so you don’t set yourself up for failure.

Look at your current situation and compare it to where you want to be. How much progress will you need to make before you’re in a position that you’re happy with? What can you start doing every day to push you closer to that finish line? Start with small steps and work your way up. Remember, you can always come back and adjust your plan later if you discover that it’s not as effective as you thought.