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The question "How do I set my financial goals?" is a common one for young people just starting out as well as for anyone taking a hard look at their finances and wanting to clarify how to meet those goals. In a tight economy it can be difficult to determine how to set your financial goals. Steps you can take to achieve this are to first determine what your goals are, what your current financial commitments, and set up a budget to achieve your goals. Sounds simple, right?
What are your Financial Goals?
Step one is to determine your goal and put a dollar amount on it, what will it take to achieve this goal.
Are you setting a long-term financial goal such as retirement? Is your goal a large investment such as a home? Is your goal more immediate such as reducing your current credit card debt, increasing your savings or buying a car? What is your time frame? Whatever your goal is, you will have better understanding of how to reach it once you set it down in black and white. How much do you need to set aside each week/month/year to achieve your goal.
What are your Current Financial Commitments?
Step two is to figure out what your current debts and monthly bills are. There are bills you have, such as utilities, rent or mortgage, phone etc that are recurring living expenses. There are others, such as loans and credit cards, that have an end point. Tally up what your current expenses are. How much do you need to have to pay them each month? How much longer will you be paying on your current loan (s)?
Budget - Not a Dirty Word
Now its "just" a matter of numbers. Income minus current expenses equals disposable income. How much of your disposable income are you willing to put aside to reach your financial goal? Will you need to adjust your time frame? Do you need to bring in more income? Short term or long term? When loans are paid off, will that income now be available to be put toward your financial goal?
When you ask "How do I meet my financial goals?" you also have to ask what you're willing to do to achieve them. Are you willing to cut things out of your budget that aren't strictly necessary? Are you willing to work more hours or take classes to be able to get a better job?
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