Setting Financial Goals in Six Easy Steps
By Space Coast Daily // November 1, 2019
With inflation on the rise, and disposable income decreasing in value and salary being the single method of financial gain it only makes it a sensible choice to set your financial goals and manage cash flow in a smart and feasible manner.
Some form of savings is essential as an emergency fund to avoid any last-minute mishaps. The idea is to not lose any sleep nor hair over poorly managed cashflows and allocating your funds according to priorities and goals set.
When your finances are set right, psychologically you end up spending less and are not inclined towards borrowing or taking on loans.
Put a monthly budget aside
Before you go on to making a budget, one needs to understand where they are spending? Why are they spending so much in a certain area? And how much money is being spent on a monthly basis?
My all-time suggestion is to put some savings aside, long-term investment and payout any debts at first and then workaround on the variables such as vacations, month on expenses, eating out and entertainment.
Though, there is no perfect percentage that should go towards short term debt payments, or towards savings, long term investments, etc. It is only wise to put most of it aside and then manage your expenses, thus reducing the overall cash withdrawal issue.
Manage daily variable expenses
One of the most common ways to improve cash flow is by reducing everyday expenses or variable expenses that are in our hands.
Through a rigorous budgeting exercise, you are able to identify where you are spending.
A smart way to regulate spending is by automating savings and investment and debt payments. This way you are forced to only spend out of the remaining cash available.
Rental Income
A great way to increase the cash flow is a strategy that never lets anyone down and if you want to diversify your investment portfolio.
If you own a home or have aspirations to have a rental property it is easy to do so by valuing rental income that is greater than what is paid on a mortgage, insurance, property taxes, etc. will increase your cash flow.
Save for your retirement
Retirement saving is the dream you push yourself so hard for a living. This type of saving can only happen through investment in taxable stock, index funds, mutual funds, bonds that are paid out in dividends (equity) or interest (bonds).
As young investors, we gain better results by reinvesting dividends and interests for a higher compounded income in time.
Develop skills to improve your income
This could simply mean upskilling yourself in order to get more responsibility for your current job. This can also be done by finding a personal mentor who can direct and guide you through some tips and feedback, while also helping you upscale.
Start a small business on the side
Use your talent, skill, and ideas to generate some income on the side. Plan to reinvest from your business into it in order for it to grow, and eventually, start paying back in a couple of years.
Conclusion
The goals you set today to manage your cash flow, ultimately start to pay back in a few years through which you can further invest in physical assets thus helping you attain your long-term financial goals.
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