Lifestyle
Whether you want to vacation in Italy this fall, pay off your credit card balance within a year, or buy a home in the next decade, all these goals require money and planning.
We know that sitting down and thinking about how to achieve such milestones can be daunting. You may not know where to start, but that's why we're here – to help!
And unlike other articles we've written, our focus won't be on budgeting in this one. Don't get us wrong! We're not advising you to just wing it when it comes to your money. But we're saying that you should first know what you're setting a budget for. Once you understand your financial goals, securing a better future will be easier.
But here's the thing. There's an art to setting goals, so this article will guide you through how to do so effectively to ensure you reach them.
Reflect on what matters to you
Earlier, we asked you to think about what you're setting a budget for before creating one. But it's also equally important to understand why you want to achieve these goals in the first place.
So often, people will set money goals they fail to reach or give up on after a short while. Yes, this may be due to a lack of discipline or willpower. But it likely also has to do with the fact that these goals weren't in tune with their personal values.
So, why not start approaching goal-setting differently? For example, if you care about self-development and are interested in enrolling in an online course or obtaining a certification, you will be more motivated to achieve a saving goal directly connected to this objective.
Be SMART about your goals
Once you've defined your financial goals, it's time to work towards them.
How? By following the SMART framework, which is an acronym that stands for:
- Specific
- Measurable
- Achievable
- Relevant
- Time-bound
Let's say you want to make that trip to Italy we mentioned at the beginning a reality. That's a specific goal.
Then, you decide you want to budget 700 JOD for this trip by October.
But maybe, you're beginning to worry that 700 JOD is too high. So, what if you break that number down into smaller chunks? Since you want to have this amount by October, which is 6 months away, you'll need to set aside 117 JOD every month.
Guess what? You've just made your goal measurable and time-bound!
When you have a clearer picture of other details, like which city or cities you want to visit and how much flights and hotel stays will cost, it's essential to determine if your goal is still achievable – given your monthly income and expenses.
If it doesn't seem like it is, don't lose hope! This is when starting and sticking to a budget will come in handy, as will increasing your monthly savings allocation.
Worst case scenario, you could push your travels to a few months after. Additionally, if you need help achieving this objective or any other one, you could create a saving goal on our mobile banking app, set a target, and regularly transfer funds to it.
Plus, when you create a saving goal, you can round up your purchases to the nearest JOD and transfer the change to your saving goal.
For example, if you pay 3.50 JOD with your card, 0.50 will be transferred to your saving goal. The amount may seem little now, but it adds up over time and will help you reach your goal faster. You can even accelerate reaching your saving goal, by multiplying your round up by up to 10x!
Write down your goals
We highly recommend you write down your financial goals on sticky notes and post them on your refrigerator at home or on your desk at work.
Studies have shown that jotting down your goals on paper means you will remember them much better, especially if you stare at a daily reminder.
If you're more of a visual person, replace those sticky notes with a vision board and add pictures of the Tower of Pisa or gelato, for example, to keep you focused and disciplined towards saving for that trip to Italy.
Track your progress
While setting a goal is one thing, achieving it is quite another. That's why holding monthly (for short-term goals, like saving for a gold lira coin) or quarterly (for medium-term goals, like saving for a car downpayment) check-ins are important. They will allow you to review where you are in your journey and assess if you need to adjust your trajectory.
Why should you set financial goals?
Ultimately, setting financial goals can help you gain clarity on where you want to go and how to get there. Additionally, having financial objectives that align with your values will likely make you more mindful of where you spend your money and reinforce the habit of saving, leading to a more secure and stable financial future.
We hope you found this article to be informative! If you want to read others like it, check out our blog by clicking the link here.
