The clean slate a new year offers is a perfect opportunity to formulate new, fresh financial goals that will benefit you both in the short and long term. The year 2020 proved to be strenuous in the financial sector for many, making it essential now more than ever to learn how to budget your finances in the most effective and beneficial ways possible. Luckily, Money Script Wealth is here to help and provide you the most helpful, practical, and productive financial tips possible. If you are looking for some financial goals to adapt in your own life in the new year, consider the following to help you get started.
1. Formulate S.M.A.R.T. Goals
While it may be tempting to think up lofty, likely unattainable goals when it comes to our finances and budgets-such as quickly being able to afford expensive cars or houses or being able to travel whenever and wherever we desire-it is much smarter to start with cultivating S.M.A.R.T. goals instead. S.M.A.R.T. is an acronym that stands for specific, measurable, achievable, realistic, and timely.
When formulating your finance or budget goals, it is wise to ensure that they are as specific as possible, such as saving a certain amount of money. To make this relatively large goal of saving money more measurable, it is recommended to use specific criteria that will help ensure you are on the right track-such as saving a specific amount of money each month and checking in with yourself to make sure this was accomplished. Of course, it is also vital to make sure that your goals are achievable, meaning not overly hard or impossible to attain, and realistic, meaning that the goal is within reach. Also, it helps to think about the timeliness factor of your goal-that is. When would you like to have this goal achieved? If you have a specific date in mind, writing this out and working towards it will help motivate and inspire you.
2. Budget Wisely
Budgeting is crucial to achieving any financial goal you may have and is a beneficial habit. When it comes to budgeting, it helps to write out where all of your money typically goes to each month so you can physically see for yourself areas in which you may need to work on. Common places to include could be entertainment, food and eating out, gym memberships, travel, rent, among others. Once you are aware of how much you are spending in these sectors, you can then work to set weekly or monthly budget goals for yourself and reduce spending in the areas that you feel too much money is being allocated towards. Learning how to budget efficiently will help with both short-term and long-term financial goals.
3. Cash Flow Management
The goal of managing your cash flow is always to have more money coming in than going out-also known as a positive cash flow. So how is this achieved? It all comes down to a few factors, including having an emergency cash reserve, reducing unnecessary expenses, creating and sticking to a well-thought-out budget, and paying off any outstanding debts or payments quickly. Interest on debts can diminish your future cash flow. Review all of your debts and your credit report for errors, take steps to remove negative items from your credit reports. Doing so will help you remain in control of your finances and grant you the peace of mind that you will not be scrambling to make ends meet at the end of each month.
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Financial & Investment Advisory services provided by Money Script Wealth Management, PLLC "MSWM", a registered investment adviser offering advisory services in the states of Texas, California, Louisiana, Nevada, New York, North Carolina, and other states where exempted. MSWM does not provide specific tax or legal advice. Please consult your tax attorney and CPA.