07/26/2021
SIMPLE STEPS TO SET FINANCIAL GOALS AND PLAN FOR THE FUTURE
Financial decisions can be overwhelming, especially during a global pandemic. Taking a moment to create financial goals and plan for how you will achieve them is an important aspect of getting yourself back on track. Creating personal short or long-term goals allows you to determine how you’ll save and spend your money in order to better manage your finances. This will support better financial freedom and security.
1. What is your income?
Identify your sources of income. This may be your full time, part time or casual job. Ask yourself the following questions:
▪️How often do you get paid? For example, weekly, fortnightly, etc.
▪️What day do you get paid? For example, every second Wednesday, the 14th of every month etc.
▪️How much do you get paid?
▪️Are you on a salary, and therefore is your income the same every paycheck?
▪️Are you a casual worker, and does your income change every paycheck? If so, what is the average amount you get paid per month?
▪️What will your total income be for the month?
2. Add up your expenses
Look over the past month and write down all the things you bought. Try and be as specific as possible. You may need to refer to your online banking app, past receipts and bills.
3. Prioritise your spending – what are the ‘wants’ vs ‘needs’?
Once you’ve made a comprehensive list of each of your expenses it is time to determine whether they are a ‘need’ or a ‘want’.
‘Needs’ are goods and services that are required to survive and function in society.
‘Wants’ are goods and services that you desire to have and are not essential.
Clearly identify what category each of your expenses falls within by:
•Highlighting all the expenses that are ‘needs’.
•Placing an asterisk next to all the expenses that are ‘wants’.
By identifying your ‘wants’ and ‘needs’, you’ll be able to identify areas where you can reduce your spending. If you are saving up for something or finances are tight, you may want to reduce your ‘wants’ where necessary. In times of greater financial security or during special times of the year (birthdays, celebrations, etc), you may choose to be more lenient.
4. Take a little time to find ways to save
There are many ways you can save money without having to drastically change your behaviours. Here are a few useful tips to get you started:
• Save money when socialising with friends by doing things that are free. Why not go for a walk or head down to Saint Kilda beach?
• Try and do your grocery shopping with a group (eg your roommates). This means you’ll be able to buy more items in bulk.
5. Set your saving goals and create your budget
Set one to three financial goals
Allocate a set amount to an emergency fund
Decide how much spending money you will allow yourself
This money is for your ‘wants’ such as entertainment, eating out and hobbies. Setting yourself a specific amount will help you to keep within your limit.
Future fund
Lastly, set aside any leftover money for a future fund to save for things in the longer term, such as buying a house or car.
Once you have determined all your costs and allocated an amount to each fund, record your spending and income in a budget so that you have a clear record of where your money is coming from and going to.
6. Commit to a routine
After creating a budget, you need to commit to a consistent routine. This can mean scheduling just 30 minutes at the start of every month to create your budget and updating it every few days with new income or expenses to ensure you stay on track.
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