Setting financial goals is an important practice if you want to save money for major life costs, such as buying a home or retiring. Many people fall into the trap of spending every dollar that they earn, or even worse: they use credit to spend money that they don’t have. These poor financial habits can lead to problems in the future, because they prohibit a person from obtaining some of their life-long goals, such as getting a mortgage to buy a home.
There are several steps that need to be followed if you want to reach your financial goals:
1. Set Obtainable Goals
Make sure that the goals that you are setting can be achieved, and take an honest look at your financial situation in order to determine the right goals for your family. For example, if you are only making $40,000 a year, then it wouldn’t make sense to set a financial goal of $50,000 in the bank within a year. So, you need to assess your current income opportunities, your household spending, and any debt that needs to be paid off.
2. Understand Your Reason “Why”
It is easier to reach a specific financial goal when you have a reason “why.” You may set a goal to save $20,000 in your bank account, but it will be difficult to follow through with the goal if you don’t have a reason to save the money. Without a “why,” you will find reasons to spend the money instead of saving it. On the other hand, it becomes easier to reach financial goals when you understand the purpose of the saved money. If you are saving for a down payment on your first home, then the day-to-day savings decisions become easier since you understand where the savings will be used.
3. Document your Financial Goals
When you set your goal, write it down. Also, it is a good idea to spend time writing down the milestones that need to be achieved in order to meet that goal. As an example, if you are trying to save $20,000 for a down payment, then you could start by saving $500 per month in an untouchable savings account. Write down this goal, and keep track of the progress that you are making.
4. Pay Attention to the Changes in the Market
As with any financial goal, it is important to watch for market changes or anything that might impact your end goal. You should also be aware of any changes that might occur within your individual family. Look for ways that you can use specific programs to help you meet your goals. For example, if you are a veteran, then you should pay attention to the trends that are happening with veterans mortgage loans, because those changes might have a direct impact on your goal.
5. Look for Ways to Cut Expenses
One of the biggest hindrances to meeting financial goals is the outflow of money. Whether in a business or a household, money is always being spent which takes away from the financial goals that you are striving to achieve. Analyze your regular spending, and look for areas where the spending can be decreased and the money can be saved instead.
Give Us a Call if you need to save money on your mortgage, our VA home loan specialists would love to help you out.