When it comes to setting financial goals, it’s never too late to get started.
Entrepreneurs and the self-employed typically have a greater responsibility to prioritise financial planning, especially as this type of work can involve a fluctuating monthly income.
Whether you’re an employer or employee, knowing how to go about setting and meeting your financial goals can define your financial stability in the long run.
What are Your Financial Goals?
It helps to establish exactly what your financial goals are. Set some time aside to consider this, and create ideas. Perhaps you have dreams of owning a home, or you’d like to purchase a property to rent out for an additional income. You may even want to save for your child’s education, or simply wish to have a nest egg for a rainy day.
Financial goals don’t only have to involve the big picture. You may want to start saving for an annual holiday, or perhaps a loved one has a milestone birthday coming up. Getting clear about your financial goals, however big or small they may be, can be a great step to get the ball rolling.
How to Achieve Financial Success Through Saving
Many of the goals mentioned will require you to start thinking about a savings plan, which will likely include contemplating investments, too.
Getting your hands on the right tips to increase your savings, or even just knowing more about the latest investment products on the market, can be a big help in achieving your financial goals.
The following ideas should help to make the process easier:
1) Plan Ahead
Don’t be shy about dividing ideas between short, medium and long term savings goals. Spreading out your goals is a great way to keep yourself motivated over time.
When planning, factor in potential location or job changes, and make sure your savings goals account for any big life changes you may be contemplating over the next few years. Planning helps to mitigate possible risks ahead.
2) Keep Track of Monthly Spend and Costs
Knowing your monthly spend and costs is the first step to knowing how much money you could set aside for saving or investment. Many banking apps – including Monzo and Natwest – offer useful insights into your monthly spend, dividing it in categories including Eating Out, Bills, Personal Care and more.
External budgeting apps – such as Money Dashboard, Cleo and Spendee – can be connected to multiple bank accounts, tracking your spend across the board.
3) Ensure Your Goals Are Realistic
Consider whether the goals you are setting are achievable. It does not make sense to expect to put away a large portion of your salary if you’re in the process of starting a new business. It does, however, make sense to set a percentage of savings aside based on the amount you earn within a given month.
Simply put, you don’t want to be putting too much away, yet be unable to pay your day-to-day bills. Talk to a financial planner or use a budgeting app to make sure your goals are achievable and realistic.
4) Explore Savings and Investment Options
You may be thinking that it makes the most sense to consider a savings account or an investment option with your existing bank. This should also take into account your risk appetite and whether you’re prepared to receive back less than you put in, for the possibility of earning better returns. Do thorough research on the latest products that are on the market.
ISAs (Individual Savings Accounts) are a great option to keep in mind, as they yield tax-free returns for contributions of up to £20,000 per year (HMRC rules apply). An innovative finance ISA allows you to invest quickly and easily in the form of Peer to Peer lending, exempting you from tax on your returns.
When making an investment decision, always contemplate the type of access you’ll need, a suitable investment term, as well as the risks involved.
5) Stay Accountable
Last but not least, share your financial goals with a partner or loved one. This helps you to stay accountable, especially in the months where things get a little tough. It helps to talk to someone you trust about your savings and investment plan, which may even lead to some new insights. Stay open to changes in your plans as new opportunities and obstacles present themselves.
Laying the right foundations can make all the difference to how successful you are in meeting your financial goals. Remain determined, even in times of uncertainty.
All that’s left to do now is hit the ground running.