What’s Your Money’s Purpose?
One of the biggest money problems people have is that they haven’t figured out the purpose of their money. This leads to aimless spending on unnecessary items and living paycheck to paycheck, without putting anything away for the future.
Instead of simply seeing money as something you work for to pay your bills, you should look at it as a tool to get what you want in life. It all starts with setting financial goals.
Setting Short-Term and Long-Term Financial Goals
When it comes to your financial goals, it’s important to have both smaller goals that you handle over the short term and bigger goals that you handle over the long term. The long-term goals give you something to focus on and work towards in the future, whereas the short-term goals keep you on track to attain the larger goals.
For example, let’s say that you’ve made it a goal to save $10,000 this year. This is a great goal, but it’s easy to put off your saving when the deadline is a year away. That’s why you would also need short-term goals. These could be to put 10 percent of every paycheck in a savings account and to limit entertainment spending to $300 per month at most. Both will put you on the right path towards saving that $10,000.
Figuring Out Your Goals
Although you can just set goals to save or invest a certain amount of money, it’s often easier to stick with your financial plans when you have goals that align with your lifestyle and values.
Maybe there’s a specific model car you’ve always wanted. You could set a goal to save enough to purchase it. Or perhaps you’re more interested in experiences. Your goal could be to save enough money for a vacation somewhere new.
Remember that your goals don’t all need to be about accumulating more money. In financial planning, there’s a tendency to suggest ways where people can save money and build as much wealth as possible. Those are fine goals, but you also want to lead a life you enjoy. Financial wellness is about more than just getting as much money as possible. It’s about using your money to improve your quality of life.
Starting Your Goal-setting
Even though you can choose whatever path you want, there are a couple universally recommended financial goals.
If you have any high-interest debt, it’s wise to focus on paying it off first. This includes credit card debt and most types of personal loans. Mortgages, student loans and auto loans tend to have lower interest rates, which means paying them off early isn’t as crucial. You can still work on paying more every month, though, to get them paid off quicker.
Everyone needs an emergency fund for those unexpected bills from life’s hardships. If you end up in a difficult financial situation before you’ve built up your emergency fund, a loan from BMG Money may be an appropriate solution. Direct deposit loans are available quickly, to resolve your hardships before they worsen. The best option, though, is to prepare for emergencies by setting some money aside every month until you’ve built up a solid emergency fund. Aim for $1,000 to start, with an ultimate goal of enough money to cover three to six months’ worth of bills.
The road to financial wellness starts with deciding how you want to use your money going forward. When you set goals for your money and stay disciplined as you work towards them, you’ll find that you’re much more satisfied with how you spend that money.