We always set financial goals with the best of intentions. Getting on track financially means less stress and worry in the long run. It only makes sense that we’d want to achieve these goals, but sometimes we fall short. If you have been falling short of your financial goals but aren’t sure why, read on to learn some reasons why this happens.
No one makes a bad financial decision on purpose, but sometimes we make decisions without having all of the needed information. Maybe you signed on a loan with a high interest rate when there were better options available, or you bought an appliance and then saw the same one on sale next week. These sorts of situations can leave us feeling defeated and like we made the wrong choice. But at the same time, with the amount of information available to us, it’s difficult to know which information to trust. Here’s what you can do. Never go with your first option out of desperation. Always research interest rates on loans or credit cards, and see if there are better options out there. Read the fine print. And see if you can find any free personal finance courses online or in your community so that you can trust yourself to make consistently better decisions in the future
Why start sticking to that budget tomorrow when you could do it today? You may think there’s no harm in one final day of spending, but that “final day” could end up lasting weeks! Make a budget and then set a date to start sticking to it, and do just that. The sooner you start sticking to a budget, the faster you’ll reach your financial goals.
If you’re struggling to make ends meet, saving 20% of your income is an unrealistic goal. When setting goals, start small. Aim to cut back on luxuries like grabbing coffee or lunch, and see how much you can save in a single week. Even if you can only cut your spending by five or ten dollars a week, it will end up making a big difference in the long run. If you begin by setting goals you know you can reach, you’ll be able to add up the victories again and again. Small achievements can create momentum and lead to big successes.
When you set a financial goal, there are a few details that every goal should have. Instead of saying simply that you want to pay off your debts, set a timeline as well, and make a detailed plan. Something like “pay off car loan by April by paying an extra $50 a month,” is much more specific. Write down your goal in a place that you can see it often, and make sure your goal is reasonable. An ill-defined goal will be too ambiguous to reach, and you’ll end up falling short.
Even if you’re on track to reach your financial goals, an emergency car repair, a broken arm, or an unexpected illness can really derail you. It’s important to have an emergency fund available so that you always know you’ll be able to pay off any unforeseen costs without breaking your budget. Having a few hundred dollars in an emergency fund is a great place to start, and you can always throw in a few extra dollars when you can afford to.
Being smart about your financial goals definitely takes a little bit of hard work and discipline, but know that the payoff is worth it! Make sure your goals are well-researched, well-defined and achievable, and always prepare for emergencies.
Federally insured by NCUA. Membership eligibility required.