Jul 31, 2017

Was better financial management among your New Year’s resolutions this year?

So how’s it going so far?

Just because you squandered the opportunity to improve your financial management in January doesn’t mean that you should give up on your resolution. 2017 is only just getting started. There’s plenty of time to pick yourself up, dust yourself off, and set off once more on the journey to financial security.

The reason your financial strategy might not be working well so far is because it lacks a certain something, an X-factor that determines the success of your strategy. Maybe you’re not being smart in managing your finances.

Here’s how to do that:

Financial planning—the SMART way

The reason your New Year’s resolution didn’t work out so well is that you did not have the right approach while planning for the future. Your goals or objectives were either too vague or downright unachievable.

The solution to that is adopting the SMART strategy. This means you need to set goals that are:

Specific

The biggest reason many New Year’s resolutions fail is that they are too wide in their scope. Simply promising yourself you’ll be a better money manager this year is not enough. You also need to specify how you’ll do that. For instance, a more specific goal would be saving more or spending less.

Measurable

In addition to thinking how, you also need to ask yourself how many. Successful financial management is a numbers game. And numbers are what you need to rely on when it comes to setting your financial goals. Setting 10 percent of the money aside each month, for instance, is a measurable goal. 

Actionable

Instead of making your goals purpose-oriented, try to set goals for yourself that are action-oriented. You need to vow to take certain actions that may bring you closer towards financial stability. Creating a separate savings account or setting up a retirement plan are examples of actionable goals.

Realistic

We all would like to be billionaires at a young age. And it’s certainly not impossible. But it’s not very probable either. No billionaire sets out with a plan to be a billionaire. It all happens one step at a time. You just have to be realistic in your goals.

Timely

When you’re setting your financial goals, you have to also set up a specific time-frame in which to achieve those goals. Simply saying you’ll be a better financial manager sometime in the future is not enough. You have to be timely in your approach to achieving those goals. If you have set a proper timeline or a specific due date, you’re more likely to act and less likely to procrastinate.

Steps for better financial management

Here are some of the steps you can take to ensure you make better use of your money:

  • Paying off existing debt
  • Building a separate fund for financial emergencies
  • Saving for retirement
  • Improving your credit score
  • Buying a house and a car

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