If you believe that your big financial goals are not achievable because of your low income, think again.
Earning more money is one of the best ways to achieve major financial goals such as saving up for your retirement fund, buying your own home and paying down debt.
However, it is still very possible to achieve those goals even if you have low or unstable income.
Are you ready to take charge of your financial future?
Let's take a look at these 5 easy tips that will help you break down your MAJOR financial goals into small, actionable steps.
1. Decide which financial goals you want to achieve
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You need to have a motivating goal to achieve it. Therefore, you need to set financial goals carefully.
Here are a few ways to select financial goals:
- List what is important to you instead of thinking about what others are achieving
- Decide short-term as well as long-term financial goals
- Use the SMART (Specific, Measurable, Achievable, Relevant, Timely) method to set yourself up for success
Your financial goal can be anything.
From building an emergency fund, planning for your retirement, saving up for your child’s education, a down payment to purchase your home, or even achieving FIRE (Financial Independence, Retiring Early), these are all major financial goals that are easily attainable with careful financial planning.
Keep your goal visible at all times
Whatever your financial goal, I urge you to write them down and place it somewhere at home where you can see it everyday.
Whether it is your bedroom wall, next to your bathroom mirror or on your refrigerator, being constantly reminded of your financial goals will inch you closer towards achieving them.
Better still, write down your goals three times a day. This will not only help you align your thoughts about achieving your major financial goals with your actions, it also does wonders in shaping your money mindset.
By recording your dreams and goals on paper, you set in motion the process of becoming the person you want to be. Set your future in good hands-your own.
Mark Victor Hansen
2. Break your goal down into small, achievable chunks
When you’re planning to achieve a big financial goal, it's important to break it down to a few short-term ones.
Doing so will motivate you to achieve those smaller goals and milestones, instead of feeling overwhelmed and frustrated when you're on the path to achieving your long-term financial goals.
For example, if your goal is to achieve financial independence, then calculate your FI (Financial Independence) number and break it down into monthly amounts.
Get specific–it's time to do the math
Write down the EXACT amount you will need to live comfortably for the number of years you plan for. Let's say you will need $1 million to retire by the age of 35. Do the math and figure out how much you will need to make and save up in order to retire early.
Another reason why you should break your major financial goals down into achievable short-term goals is to monitor your progress.
If you’re falling short on your monthly savings target(short term goals), you'll be able to make adjustments to your budget for the next month to catch up to your mid-term savings goal.
In short, your short-term goals are essential stepping stones to achieve your long-term financial goals.
3. Plan your course of action
Now, it’s time to plan your actual strategy. You have to create your short-term goals with a definite time frame in mind so that you can assess your progress.
Here are key things to keep in mind:
- Make your plan practical
By practical, I mean your financial plan needs to be flexible.
You need to plan for emergencies, as well as unexpected events. For example, your goal may be to save up around $12,000 annually. That means $1,000 every month.
However, what if there was a financial emergency this month such as road accidents or medical bills you had to pay and you could only save $500 this month? That means you’ll have to save $1,500 next month to make up for the loss of time, which in turn will take you longer to achieve your long-term financial goal.
With that in mind, it will be better if you plan to save $11,000 annually and thus have one extra month leeway to achieve your goal. This way, it’ll be easier for you to manage even with your low or unstable income and with unexpected circumstances if any.
It is always better if you’re able to save more. So, if you can save more than what you’ve planned.
- Create a realistic budget
I am sure most of you struggle to create a budget that works for you. Believe me, it isn’t that difficult to plan a realistic one, even when you have a low income.
You can choose a plan for your budget according to your unique needs.
One of the best ways to budget is to follow the 50-30-20 strategy. You keep 50% of your income to meet your daily necessities or needs, 20% for savings and the remaining 30% to fulfil your wants, such as the occasional takeaways, coffees and leisure activities.
Even if your income is limited, you can attain financial goals by carefully planning a realistic budget.
Looking to manage your money as a couple? Check out this post on 12 budget management apps to track your financial goals every month.
You can also search for good budgeting tips online. Try browsing on Pinterest: it literally is a mind field of ideas when it comes to financial planning and money management!
- Keep your documents organized
To become a strong money manager, you need to organize your financial documents carefully. Make separate files to organize your credit card and bank statements, insurance policies, investment related documents, as well as your tax returns.
4. Save money whenever you can and increase your income every year
To meet your major financial and money goals, you need to save more money. The key to financial independence is to live within your means and avoid inflating your lifestyle as your income increases.
To set yourself up for success, you can automate your savings with a few easy steps! At a particular day every month, set up an automatic transfer from your cheque account to your savings account.
Just by doing so, you will have automatic savings each month without fail. Instead of spending all of your income on bills, unnecessary shopping trips and fail to meet your savings goal, you're already on your way to hitting your savings target without expending extra effort.
Manage Debt And Increase Your Income Streams
One of the biggest obstacles to achieving major financial goals is debt and credit cards.
Charge your credit cards in a way that you can repay the entire balance within every billing cycle. Alternatively, you can consolidate debt or opt for settlement, depending on your financial condition to repay your dues.
You can try some side hustles without investing a dollar. It is better if you choose one that you’ll enjoy doing. It will help you pursue such an activity in your leisure time.
5. Reassess and modify your financial goals along the way
Hitting obstacles when you're working hard to achieve your financial goals is something you must be prepared to deal with.
When you're on the path to attaining long-term, major financial goals, you're most likely to experience certain life-changing events like marriage and childbirth.
The chances of being made redundant, losing your job or facing a financial crisis are things you should be prepared to face.
You might have be forced to take a break from achieving your financial goal but you shouldn’t lose hope. Just stay positive and make the necessary adjustments to achieving your major goals.
Lastly, it's very important celebrate milestones of small-term goals that are essential to achieving your long-term, major financial goals. If it means splurging a little to reward yourself for delayed gratification, it is definitely worth it!
Lastly, it's very important celebrate milestones of small-term goals that are essential to achieving your long-term, major financial goals. If it means splurging a little to reward yourself for delayed gratification, it is definitely worth it!