Let’s talk about goals! Everyone has them, but how measurable are yours? In financial planning a goal should have three parts: Purpose, Time, Amount (PTA). By having these three things, your goals will be measurable and realistic. For example, everyone I know wants to travel right now while we’re young but it’s hard to find the money for it.
Take a look at these two goals:
I want to travel to other countries soon!
I want to travel to England, Scotland, and Ireland in two years and I want to save $6,000 for it.
Which one of these goals seems better? Goal 2! It has the PTA all written out. By setting these ideas, you give yourself the purpose to work towards instead of a general idea, you give yourself a time frame to save during, and you have a total amount of money. It can be a little daunting to try to save a lot so having a set goal that you can see yourself chipping away at is really rewarding.
Step 1: Making your goals!
Take an hour one day and sit down with no distractions. Grab some pen and paper and start writing out some goals that you have for your future. Start with some general ideas and work your way to more specific thought out goals.
Here are some common goals for recent post-grads like myself:
- Emergency fund (4-6 months living expenses)
- Travel Fund
- Down payment for a house
Step 2: Set your Time and Amount
Look at your salary and mandatory expenses to see how much you can save every month towards your goals.
- Save for your most important goals first! (Emergency fund should be at the top of your list)
- Short term vs. Long term goals: Take into account which goals you have less time to save for and determine how much you want to put towards each goal
Don’t Forget About Retirement
- While thinking about all of your goals, don’t forget about setting aside money for your retirement accounts and also FSA or HAS accounts for medical bills
Staying on Track
- Make your savings automatic
- Don’t skimp on everything you want to do just to save more money but do pause and take a moment to think about what things are worth the money and what you can pass on
- Every couple of months sit down to take a look at your goals.
- Are all of them still valid things you want?
- Have you been able to stay on track without depriving yourself?
- Salary increase? Take a look at what you can be saving more for!