To weather emergencies saving money is the first step and for that to happen a financial goal becomes inevitable. Read to know more.
Savings are the financial lifeline for an unexpected event that is right behind you and ready to hit you anytime. In fact, even as you are reading this blog.
It is very common for us to be serious about getting a job and securing regular income but the same does not happen for safeguarding the income itself.
Being a part of the game is fine but winning matters.
The Right And Real Financial Goal
Many people often have ‘nano’ financial plans and then dismiss the idea of having one. This is a very bad practice as these goals are time-bound and closely linked to a lot of behavioral factors.
Before setting financial goals remember to take into consideration your income, expenses, and ability. Once set, it allows you to put dreams and hopes into action. It starts with locking a goal and then working on a plan for achieving it. It requires that your financial goals must be:
Outlining money goals this way can set you in the right direction and the necessary motivation you need to follow through on them.
Set Dual Savings Goals
Even if your savings are less it is always more in the long-run. On the other hand, setting too many goals will only lead to added pressure and eventually dismiss the idea.
To begin with, there’s a simple route to approach the savings strategy. Choose one financial goal for the short term and one for the long term. Stop thinking too much about whether you can pull it off or not because ultimately it’s your money and willpower.
Short-Term Financial Goal: Build Your Savings
Have you ever thought about what happens if you don’t have a rainy fund or savings? No brainer, you tend to borrow and acquire debts. it is always good to have a back-up that will form the priority over other savings goals.
In the short-term financial goal, first, decide how much you need and want to save. For instance, is it three or six months’ worth of expenses you want to save? Or you may choose to save a fixed dollar amount. So that you could break that goal down to determine how much you need to save each month to achieve it.
Long-Term Financial Goal: Go Big
The goal is pretty much the same as short-term and the only difference is when setting it; consider the next five, 10, or even 20 years.
The pandemic has changed the game so even if the purpose of savings is not defined at least the goal is accomplished or you may want to keep that money for retirement instead.
Tackle Your Goals
Just like soccer, the goal post is visible now but you can’t score a goal just like that because you’ll have to tackle the opponents (unemployment, debts, expenses, and so on). A strategy is required that has got more to do with fine-tuning the set financial goal.
Evaluate What You Have
Cash crunch management depends on various factors so knowing first what resources you have to play around and the expenses that are stopping you from savings is a good step to start off. It might look unpleasant but review your entire financial picture, including:
- How much is remaining in savings
- What is the frequency of your income, if any?
- Your current expenses and budget
Right now everybody is in a financial emergency and the problems are pretty much the same. A clear understanding of your financial picture allows you to identify feasible options such as opting for an emergency fund (no credit card please!) that can help you adapt and survive in the current circumstances.
Lower-income families need not save much but emergency situations can stretch your financial limitations.
So, take aim to score the goal!
By Karthik V