Last week, we began a discussion on the importance of becoming better economic stewards of our finances. This week, we will begin on our journey towards establishing financial goals that will place us in a better position to live financially responsible lives. In this series, we will focus on 12 areas that will help us navigate towards our end goal successfully.
These 12 areas will help us focus on three types of financial planning strategies: 1) short-term, 2) mid-term, and 3) long-term:
- Short-term strategies: Funds for short-term goals within the next year should be easily accessible,
- Mid-term strategies: Discovering tools that will assist with focusing on goals over the next two to five years, and
- Long-term strategies: Finding options for saving over a period longer than five years.
Please keep in mind, these 12 areas are not an exhaustive list of “do’s and don’t’s”. Furthermore, each of the 12 areas may not apply to everyone. It is only intended to be a starting point. As individuals, we have to make adjustments based on our own personal situations and personalities.
Our first financial goal to discuss is setting up a personal savings goal for the year. When setting up a personal savings goal for the year, we need to focus on determining an amount that is realistic. Questions to ask include, “What is my reason for saving money? Is my initial goal too high? How much can I realistically put aside and continue to live on comfortably?”
Many people begin with lofty ideas in the beginning and when they fail to reach that savings goal by the period’s end, they tend to be engulfed by feelings of guilt and defeat. Depending on the individual, this can lead to them discontinuing their work towards the savings goal. For others, this may be the very motivation they needed to help them refocus on their end goal. After revisiting the goal and making the necessary adjustments, they can easily get back on track and move forward with their plan.
Consider how much your income is per pay period and how often you receive your salary. When you determine the amount you want to save overall, you will need to decide on how much you will be placing into your account on a regular basis. It is recommended that you save at least 10% of your monthly salary. However, if in the beginning, you are unable to set aside that amount, then you can start with a lower amount until you feel comfortable enough to make an increase. Do not use the inability to set aside a certain amount as an excuse to not save at all.
Once the parameters are established, conduct your own personal research to find the best banking options which can provide you with the extra motivation to adhere to your savings plan by offering savings accounts that will provide rewards for saving. Another key area of interest is to determine which bank offers the best interest rates for savings. In addition, you will need to connect the savings account to a bank account you use to maintain your regular transactions or consider having the amount deposited directly into the savings account automatically. After you have completed these steps, you are ready to begin your journey towards financial independence and becoming a better economic steward of your finances. The most important part of the process you will need to remember is to take the first step.
In the upcoming weeks, we will continue to discuss the various ideas which could possibly assist each of us in attaining financial independence. Next week, we will be discussing the second financial goal of solidifying our personal emergency fund. I would appreciate any feedback from anyone as this is a community effort to living our best life in honor of the One Who has given us this life to live. Love God…love others….love yourself!
Sean Mungin, author of “The Thorn In The Flesh”