Setting – and reaching – financial goals is a critical life skill for anyone.
Whether you’re living pay cheque to pay cheque, budgeting for a family, saving for something big, or just wondering where your money goes, the ability to manage your money will help you hit your target.
Common money goals often include:
- Reducing credit card debt
- Saving for something (house, car, holiday)
- Paying off a loan (mortgage, student)
- Saving for your future (kids, investment, property)
Whether you have a high or low income, what strategy can you put in place to help you get to where you need to be? Here is our step-by-step guide to achieving financial goals.
Step one: Set a target
Setting a target is important, as it may change the following steps you need to take. You need to ask yourself a couple of questions to define what requirements you have:
Are you juggling debts or loans?
According to MoneySmart, the average Australian credit card debt is around $3,000. Students generally have around $17,200 of debt, states the Australian Bureau of Statistics. Then there’s mortgages or personal loans. If you don’t have a plan to reduce these figures, it might be worth setting one now to free up more money in your future budgets, and minimise interest payments.
Do you have dreams of something/somewhere new?
Many of us dream of an escape, or that new gadget, but can’t indulge because of our budgets. When was the last time you went on holiday? Expedia’s research claims that Australia is the third-most vacation-deprived country in the world. We accrue annual leave, but don’t take it. Perhaps it’s time you did. Set yourself a reasonable budget for your holiday or gadget, then work out an action plan for how much you can set aside each week until you have saved enough.
Step two: Take the first step
First you need to learn and control your finances. Smart About Money recommends dedicating 30-60 minutes each week for a month to discussing and researching your money.
Keep an eye on your bank statements, as these will yield insight into both incoming and outgoing funds. Where is money coming in? Where is it going out? Figure out where you can start saving – learn where you can trim the fat.
Step three: Begin your action plan
Now that you know what to save for and where you can cut costs, you can start on the road to success.
There are many different ways people achieve financial goals. Here we’ve outlined two examples to help give you an idea as to what will work for your own needs.
Saving with your credit card
If you are struggling with credit card debt and high interest or fees, you should consider your options and whether your existing card and provider is right for you.
There are a number of credit cards available in the market and for varying needs and purposes and it’s important that you find out all you need to know about the credit card’s features, terms and conditions.
Low purchase rate credit cards may be worth considering as they offer low ongoing interest rates on purchases. For example, the Virgin Money Low Rate credit card applies 11.99% p.a. on purchases, which is one of the lowest purchase rates available. No annual fee cards may also be worth considering as well as it means you don’t have to pay an annual fee on your credit card. For example, Virgin Money No Annual Fee credit card has no annual fees to pay, ever. Even small savings each month can amount to a lot per year.
You likely already know the drill here, but it’s time to put it into action: Go to the shops with a list and avoid impulse spending. You’d be surprised at how much this can save you.
Alternatively, you could save for new gadgets, holidays and other rewards as you spend by using a credit card that offers points, such as the Virgin Australia Velocity Flyer Card. But this strategy is best suited to the expert, controlled budgeter who is on top of their bills, debts and repayments and knows that the reward points earned will yield more value than card costs.
Step four: Monitor your progress
After you’ve been through the effort of figuring out your finances in ‘Step two’, don’t go back to ignoring them as you start on your financial journey. Keep an eye on all of your accounts, be they bank, credit card or even superannuation if that’s what you are focusing on.
Keenly monitoring your funds will continue to tell you the same information from before – how are you going, where can you save – so you are always on track.
Are you ready to achieve your goals?