Set Financial Goals. Achieve them with a Plan.
January 28, 2021
Setting financial goals are a common New Year’s resolution. Although following through takes effort, creating a workable plan to achieve them is simple. Begin by setting some financial goals. Here are a few suggestions to get you started.
1. Start an emergency fund
While you may believe an emergency fund is best used for short term needs such as car repairs, it can also help you with larger expenses throughout your life. For example, if you should experience a loss of income or a large medical expense, it can keep you from accumulating credit card debt when you need to cover one of these unplanned expenses.
A good way to start a fund is to set a goal, such as saving $1,000 in a year, or even six months. To make it easier, set up automatic transfers from your checking account to your emergency fund each payday. For example, if your goal is to have $1,000 by the end of the year, start saving $91 each month beginning in February. To reach $1,000 in six months, you need to save $167 each month starting next month.
2. Pay off your debt
If being debt free has eluded you so far, there are ways to make it a reality. Here are two ways to start tackling credit card debt:
The avalanche method: focus on paying off the credit card balance with the highest interest rate first. With this strategy, you make minimum payments on all other debts but pay extra toward the debt with the highest interest rate until it's gone. Then, you tackle the credit card balance with the next highest interest rate, and so on.
The snowball method: pay off your smallest credit card balance first, no matter the interest rate, then the next lowest balance, and so on. This method is a quicker way to pay off credit card debt, but will not save you as much in interest payments as the avalanche method.
3. Help others
Finding a few charities to support can make you feel like you’re part of the community and allow you to help make it a better place for everyone. There are many ways to help others besides donating, such as volunteering. Consider including volunteering and contributions to causes you support in your 2021 plans.
Setting financial goals is the first step, but establishing a plan to reach them is an important second step. Give a few of these financial goals a try this year!
Tags: Money Management, Savings, Community