How to Stick to Your Long Term Financial Goals

Reaching Long Term Financial Goals

In a recent study, 77% of Americans acknowledged that they are stressed about money. 58% of individuals acknowledged that they feel finances control their life.

With money causing so much stress for millions and millions of people, you’re probably among the millions of people who get a knot in their stomach when they think about their finances.

When financial stress becomes a driving force in your life, it’s easy to feel like you’re in quicksand. The harder you fight, the further you sink, and slowly, hope slips away. That doesn’t have to be the case.

There are some basic steps that you can take to get your finances in order. Doing so allows you to set yourself up for success in the future.

Establish Your Goals

Why do you want to get your finances in order? This question should be the beginning of the process, as your financial goals are uniquely yours.

Do you want to save up enough money to put a down payment on a house? Are you trying to get out of debt? Do you want to stop living in financial stress?

The way that you answer this question will largely dictate what you need to do next, and the best way to go about getting your finances in order. “In order” has different meanings to different people, so you’ll want to start by deciding what you want to achieve.

Review Your Credit Report

Credit reports give you a better insight into what’s happening with your finances. Taking a look at your credit report is especially important if you’re planning on purchasing a home.

There are some myths surrounding credit reports that should be cleared up. You can request a credit report from any of the major credit bureaus without damaging your credit score.

Legally speaking, everyone is entitled to one free credit check per year, and requesting this report does not damage your score.

It’s also important to note that roughly 50% of people find mistakes on their credit reports, with approximately 25% of those mistakes being major issues that can damage a credit score.

Checking your credit report not only allows you to get a visual representation of the money that you’re spending every month but finding mistakes on your credit report is important.

If you find mistakes, contact the creditor listed on the report and work through the process of having the incorrect item removed from your credit report.

Create a Budget

Once you have your goals in place and you’ve checked your credit report, it’s time to make a budget. There are two incredibly important aspects of budget creation.

First, you need to make a realistic budget. Don’t understate the amount that you have to spend on essentials just to make your bottom line look better. Don’t account for “extra money,” either.

Instead, your budget should only include the minimum amount that you expect to make. It’s also a good idea to budget for any expenses that fluctuate to be high. These steps allow you to have more money than you plan on.

The second important aspect of budgeting involves commitment. Once you make your budget, be ready to stick to it. This won’t always be easy, especially if you’re in a bad financial position because of some frivolous spending.

Living by a budget isn’t easy, but you’re never going to change your financial state without a detailed plan. This plan should dictate how you spend every dollar that comes in.

Budget your monthly expenses in order of their importance. Food, water, and shelter are the three basic human needs, and they should be the starting point of your budget. Your budget also gives you a good idea of how you’re spending money.

For instance, if you don’t have enough money for food or utilities but you have six different streaming services, your budget should help you recognize areas where you can apply the next step.

Trimming the Fat

This step is directly linked to the first and third steps. Your financial goals impact your budget, and both of those dictate what’s considered “extra.”

If you’re struggling to pay your monthly bills and keep food in your refrigerator but you have six different streaming services, those streaming services need to go. If your financial goals involve getting yourself in a better position to survive, you may need to cut out going out to eat, going to movies, and taking part in other forms of entertainment.

Remember, it won’t always be like this. You’re working toward a goal, and when you get to a better place in your finances, you can reevaluate and start incorporating some of those extras.

If you’re trying to save a down payment for a home, you may not have to be as extreme with your scaling back. Evaluate your plan and get rid of things that are going to create unnecessary obstacles.

Automate Your Bill Paying

As hard as it is to admit, some people struggle with their finances due to a lack of organization. Even if that’s not a problem for you, automating your monthly bill payments is a great idea.

Automating your monthly bills doesn’t only ensure that you don’t miss anything, which improves your credit score, but it also allows you to schedule your bills at a time that’s good for you.

For instance, if you get paid twice monthly, don’t schedule all of your more expensive bills to be paid at the same time. Spacing things out allows you to better budget your money and helps you have enough for other necessities.

Supplementing Your Income

Depending on your primary source of income, supplementing that monthly income may include picking up a second job, but it could also be as easy as grabbing a side hustle.

The COVID-19 pandemic made remote work a major part of life for millions of people, and many companies are still hiring people to work from home in some capacity.

If your biggest financial problem is that you’re not making enough money to live the life you want to live, whether it’s to pay off debt, save a down payment, or simply be more comfortable, adding a second source of income is a great idea.

One of the biggest misconceptions about supplementing your income is that you need to make a lot of extra money. If you sign up to deliver through a food delivery app and can make an extra $100 per week, that’s $400 per month, which comes to $4,800 per year.

If you’re good with technology, you can find plenty of freelance digital marketing opportunities that allow you to show off your creativity while making some extra money.

Even if none of those things work for you, there are work-from-home opportunities in virtually every industry, many of which offer flexible scheduling.

Improving your financial position takes some work. It requires you to make some changes to how you’ve been living. Whether you’re trying to save money for your dream home, get out of debt, or you need more money to live on, these tips are a great place to start.