2020 is the start of a new decade and for many people, a clean slate. The new year is a time when people set goals for their career and personal life. We think it’s a good time to also start setting financial goals that could help you soar in 2020.
“…having a financial plan – especially if you’re starting to earn an income for the first time – is important.”
The importance of setting financial goals
The unfortunate reality for most South Africans is that a big percentage of their income is used to pay off debt. They’re left with very little after the money is allocated towards this – the rest is used for necessities and not much room for saving. This is why having a financial plan – especially if you’re starting to earn an income for the first time – is important.
The saying goes that if you fail to plan, you plan to fail. If you establish good habits for your money, you’ll always be prepared – whether it’s the sudden loss of an income or building towards a financially free future. The first part of setting a plan is understanding the bigger picture of your financial goals.
What are financial goals?
Financial goals are what you want to achieve with your money. Examples of common financial goals include saving for a house, education, a vacation, or to retire comfortably. They are often categorised as short, mid, and long-term goals.
What are short-term goals?
These goals usually have a short time limit (perhaps a year) and include: saving for a vacation, saving for minor home improvements or saving to purchase something expensive – a ‘splurge’ item.
What are mid-term goals?
These goals could be between three to ten years. These types of goals include saving for your children’s education, a downpayment on a property, or making a plan to pay off a loan.
What are long-term goals?
This type of financial goal takes more than ten years and includes living a debt-free life, saving for retirement, or helping you build towards a second career – starting a business.
“…if you fail to plan, you plan to fail.”BOOK NOW
How to achieve your financial goals
Once you’ve determined which category your goals are in, you can start your financial plan:
Why do you want to do it?
It’s great that you’re creating a plan for your money, but if you’re doing it because you have to, then you may not be as motivated. Visuals will help you succeed. If you’re saving for a holiday, surround yourself with images of your destination. It will make you more excited and will motivate you to kick your plan into gear!
Now’s the time to sit down with your bank statements and expenses. As scary as it sounds, you need to make a decision on what to cut down – differentiate between your needs and wants. Track your expenses and savings using an excel spreadsheet or any online budgeting tool.
Once you’ve determined the monthly amount that is needed towards your goal, set up an automated debit from your account into a savings account. Having this debit will ensure that you don’t make excuses when it comes to saving.
Create a second income stream
A second income stream doesn’t mean having a second full-time job. It’s investing your time in a ‘side hustle’ that could generate a second income. This is how most small businesses are born. Some people use creative skills (photography, writing, art, etc.) to earn a second income. Other people invest – like property – and use this income towards their goal.
2020 seems like the perfect time to get smart about your finances and your financial future. Our property investment seminars can help educate you about the South African property market, but also how to manage and build a profitable property business. Book your FREE seat today to get started on a financially fulfilling journey.BOOK NOW