Achieving Financial Goals: A 7-Step Guide You Need to Start Implementing Right Now

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Have you ever said you’re going to set aside an X amount of money every month, only find yourself woefully low on funds and hoping you’d get by until the next pay cheque?

You can give yourself any amount of excuses you like. Oh, it was your best friend’s wedding, or your car was due for a service or you had to pay off your insurance premiums.

If you’re finding yourself running low on funds at the end of every month, what you’re trying to do to save is probably not working.

Here is a 7-step guide that would help you to achieve your financial goals:

  1. List out what you need and prioritise
  2. Make a budget and monitor where your money is going
  3. Have an achievable goal in mind
  4. Create an emergency fund for rainy days
  5. Invest early and let your money work for you
  6. Clear your loans and credit cards debts
  7. Practice frugality and don’t waste money

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The most important rule to remember is that you need to spend less than you earn. Sounds simple, but many of us struggle with that.

1. List out what you need and prioritise

Even before your salary is in the bank, make a list. List out all the payments that you need to make towards utilities, rent, supplies, etc.

List out anything that you need to buy this month. Now that you have a list, get rid of anything on that list which isn’t a dire necessity. You should now have a list of the expenses for the month. And it is this list that we are going to use to make a budget for the month.

2. Make a budget and monitor where your money is going

Spendio Expense Tracking App

Making and, more importantly, sticking to a budget is a must especially when you’re trying to save. The earlier you start, the better. You don’t have to wait for the next New Year’s resolution. You can start off today.

Read also: Be Thrifty Now to Thrive in Your 30s

Start off by monitoring your day to day expenses, and subsequently start to add things like your insurance premiums, utility bills, parents’ allowance, etc.. There are plenty of apps available in the market that can help you plan your monthly expenses. Gone are the days of pens and papers. With these apps, you can track your expenditure on the go, and make sure you don’t overspend. If you do nothing else, just get one of these apps and start using it.

When you’re just starting out your professional career, your financial obligations are lesser and as such, is the ideal time to increase your savings. The first thing to do when you start working is to open a high-interest savings account. It’s important to make sure any savings you have isn’t sitting idle.

The main goal of creating a budget is to ensure your expenses don’t go beyond your income. The best way to do this is to track your expenses and see where your money is going.

Related: Starting Your First Job? 6 Financial Steps You Should Take

3. Have an achievable goal in mind

Image of a notebook, pen and coffee with a list of goals

Saying that you’re going to start saving is all well and good but will your savings be enough for your needs and wants? Can you make that road trip in the U.S. come true in 2 years’ time or will you have enough when you get married in 4 years’ time? Will you be able to achieve financial freedom?

It’s great to have a savings goal in mind. But approaching it the wrong way can make the process necessarily difficult.

When we start off our savings, we tend to try to do too much in too little time. You end up setting an unrealistic budget and when you fall off the wagon, you might get discouraged and abandon the plan altogether.

Having a framework for your savings is crucial to its success.

Split your goals into categories of short-term, medium-term and long-term goals. For example:

  • a short-term goal might be to set aside S$10,000 in your savings account in a span of 12 months
  • a medium-term goal would be to have more than S$40,000 in this account within 3 years
  • a long-term goal would be to have enough money in this account to kick-start your dream of starting your own business in about 8 years.

Related: Living Paycheck to Paycheck? 8 Steps to Break the Cycle of Urban Poverty

4. Create an emergency fund for rainy days

While saving up for your house, a car or your child’s education is important, it is equally important that you put money aside for emergencies. Some banks like OCBC have a ‘savings jar’ function in their online banking platform. This allows you to channel some of your savings every month into a virtual savings jar, making it harder for you to withdraw or use the money.

Use such functions or open a separate savings account to build up your rainy day fund. Do this without fail and soon you’ll have money for emergencies.

Just remember, your favourite jacket on sale is NOT an emergency. You mustn’t use the money from this account for such things. Keep this money aside for sudden hospitalisation or job losses.

Image of money and a locked box

Related: 6 Money Mistakes Singaporeans in Their 20s Are Making

5. Invest early and let your money work for you

Having savings and an emergency nest to fall back on is great but savings alone cannot be your retirement plan. Thanks to inflation, what you save today will be worth a lot less ten years from now. On the flip side, thanks to the power of compounding, what you save and invest today will be worth a lot more in future. Avoid leaving your savings idle and invest them in the right instruments to get the best returns and maximise your savings.

Related: 5 Investment Guidelines For Newbies to Grow Their Money in 2018

Image of a computer mouse, tax forms and pen

A good portfolio of investments should have a mix of high, moderate and low-risk investments. Look for investments that offer short-term or long-term returns. Do your research before getting into riskier equities. You could always employ the services of an investment advisor.

Related: Beginner’s Guide: How To Test Your Risk Appetite When It Comes to Investing

6. Clear your loans and credit cards debts

Whether it is a home loan or a credit card bill, make sure you focus on repaying your most expensive financial commitments first. In many cases, it would be your credit card bills, as that incurs an interest of around 26% p.a. if left unpaid. Your home loan or HDB loan, although a huge amount, will usually be one of your cheapest loans. Once you start being debt-free, you’ll have more disposable income to save and invest.

Related: Should You Pay off Your HDB Home Loan in Advance If You Can?

7. Practice frugality and don’t waste money

Last but not the least, make sure you don’t waste money. While it is good to buy yourself things you want, be careful about what you spend on. There is a difference between needs and wants, so make sure you only buy what you need if you’re trying to save.

Related: 10 Things Successful People Don’t Waste Money On

Whether is it’s a short-term financial goal or financial freedom you’re aiming for, the quickest way to achieve it is by starting now. Implementing these money tips and techniques are bound to get you closer to your goal.

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