The easiest way to set and stick to your financial goals is when you make them realistic enough. Saving money and making your finances healthier is a worthy goal, but people tend to throw themselves into it with so much vigour that they get in way over their heads before 3 months are up!
If you have a financial goal you want to meet, here are some simple tips to follow to make your goal reachable (and doable):
- Set a Realistic Target with Your Income in Mind
Let us say that you set a target to save 50% of your income a month, and you earn N100,000. If you tithe, that is 10% gone. Transportation (which could be fuel or public transport), is another 10%. Then you have groceries, utilities, and the once-a-month splurge that you allow yourself to indulge in. After calculating all of that, you will find that your target of 50% a month is not feasible.
While stretching yourself financially is good, you shouldn’t deliberately suffer just to achieve a goal. You need to rework your financial target to suit your income and expenses, or cut down on expenses to meet your target. If not, you will put yourself off from setting financial targets forever, and that is not a good thing.
- Spend Smarter, Save More
If that saving target is very important to you, then you will need to find money to save, This means you will have to become a smart spender to save more money. How can you do this?
Rank Your Expenses from Most Essential to Least Essential: The least essential items on your list are the things you can do without. So do without them, for now, to make that financial target a reality.
Cut Down on Small-Small Spending: Track all your expenses, including the N50, N20, and N10 expenses. You will be surprised how much you spend in a week buying small chops and snacks. Track this for one week, and limit your spending or cut them out completely.
Eat at Home: If you buy lunch every day at work, you should think of preparing your lunch at home and taking it to work with you.
Always Carry Cash: Paying for items with cash limits your spending, since you know exactly how much you have and what you need it for. Withdraw a fixed amount of cash at the beginning of the week, and determine not to withdraw any more till the next week begins.
Get a Pre-Paid Card: Alternatively, you can get a pre-paid card and fund it every week with a specific amount of money that you will never spend above. Both of these methods will help you hone your budgeting skills and stick to them.
Be a Bit Frugal with Utilities: Turn off all bulbs during the day time. Turn off the TV if you aren’t watching it. Check how much you spend on data and airtime. You can spend less on utilities when you are smart about using them.
- Open a Separate, Card-less Savings Account
It is not a good idea to save in the account you spend from. Open a separate account solely for savings, and opt-out of getting a card for it so that you aren’t tempted to withdraw from that account. Anytime you get paid, the first thing to do is to transfer your savings to the savings account. You can make this process automatic by scheduling transfers every month.
This is how you set realistic financial targets and stick to them. Nothing too over-the-top, but something to help you improve your budgeting and spending skills while meeting your financial goals like a champ.