No matter what your financial goals are, from getting out of debt to buying a home, having a plan is the best way to reach them. Tossing money towards them when you have a little left is not very efficient. There is always something that will compete with your available cash. Coming up with a plan doesn’t have to be complicated. The satisfaction you feel will make the sacrifice worthwhile. They can be short-term, such as saving for a weekend trip, to longer-term, like saving for retirement.
Have Smart Goals
Using the SMART method of setting your goals. Your choice should be (S) specific, (M) measurable, (A) attainable, (R) relevant, and (T) time-bound. So, trying to save more money would not meet these criteria, while trying to save 1000 dollars in 6 months would. Having something specific, that you will know when you accomplish, that you can achieve, that matters to you, and that has an end date, is much more likely to be successful than something less well thought out.
Lower Your Monthly Expenses
Jumpstart your plans by lowering your monthly expenses. Direct these funds toward your goal. This is a low-effort way to see some real progress quickly, which can make it easier to make more impactful decisions later on. One easy way to lower your monthly expenses is by refinancing your student loans with a private lender. You can take your existing loan, save money every month, and use what you save to move you closer to your goal.
Choose Goals That Make Sense
You want something that you are personally interested in, but it should also make sense. It doesn’t make sense to save for a big-ticket item if you have an enormous amount of credit card debt. Of course, you don’t have to be debt-free to enjoy life, but if you are struggling under your debt, spending some time paying that off before you redirect your efforts makes sense.
You Can Have More Than One Goal
That doesn’t mean you need to set aside your dream of buying a home if you hope to pay off debt. Instead, separate your funds and work toward both. Your progress will not be as quick, but if you are saving towards something that will add to the quality of your life, such as buying a home, it can make the more challenging goals, like paying off debt, easier to tolerate. Keep interest rates in mind, and make smart choices. Prioritizing credit card debt repayment, with its high fees, may slow you down initially, but will help over the long-term.
Keep Your Funds Separate
Don’t mix these funds with your general account. Know how much you plan to use from each paycheck. On payday, either transfer to a separate account or make a debt payment. Many banks have the ability to create buckets, where you deposit your money into one savings account, but divide it, either by dollar amount or percentage, into virtual buckets. You can keep all of your money in one account this way, but see at a glance how much is in your different funds.