There are a lot of reasons why people fail in managing their money matters and one big factor in these scenario is not having any financial timeline to work on. This timeline lays out your plans and milestones that will serve as your guide as you build a strong and reliable financial future. You cannot live from day to day because you have to plan for what you will need down the line.
This timeline will also plot out how you can systematically reach your financial targets in life such as getting and paying off a mortgage loan. This helps you provide a stable and secure environment for your family. This timeline can also be useful in planning for that car loan or even setting out a guide in paying off your student loans and other types of debt.
This timeline will serve as a guide and merely a tool in helping you financially succeed in life. Having one does not automatically ensure that you will reach your financial objectives. It is similar to when you have food in you bag and you believe you will never go hungry. Unless you take out that food and eat it when you feel hunger, that food will be of no use to you.
Gallup.com shares that a large majority of American consumers fail to make detailed budget for their household spending. This is alarming because when you are not able to monitor the money going in and out of your budget, you would not be able to properly pay debts and even save at the same time. This is similar to not having a financial timeline because you have no idea where you are with your finances.
Benefits of a financial timeline
If you are trying to get a good handle on your finances, trying to pay off debt or simply want to have a structured approach towards your financial goals in life, you need a financial timeline. Here are more benefits of using a list to guide your financial journey.
- It reminds you of your target. Have you ever walked into a room and totally forgot why you were there in the first place? Has there been a time when you just entered the grocery and completely blanked out on what you need to pick up? These things can happen to you when you are managing your finances and having a timeline helps you keep your eye on the prize. As you list down your ideas, milestones that you want to reach at specific points in your life or even plans, they serve as a guide that helps you remember why you are doing things. If you are experiencing a bad day at the office, your timeline can help you remember how your kids adore you and how you need to provide for their needs or how you need to make sure that they have beds to sleep on at night.
- It pushes you to work hard. Financial improvements would normally always refer to increasing income or lowering down your costs to save money and your timeline can help you achieve these goals. But if you look at it, along the way, your guide is helping and pushing you to work hard. Not only that, it is also helping you work smarter. There is a big difference between the two and you need to be able to merge the two together. Hard work is putting in long hours everyday just to get by but working smart is doing the same and investing the money to earn extra income so you can cut down on work as you grow older.
- You get to track your progress. If you are into photography and you are trying to save for a new gear, it makes sense to track how much money you have so you have an idea how far along you are. The same idea apples with having a financial timeline because it allows people to be on top of their finances. WSJ.com shares that most people would need to hire professionals such as a financial planner to do the same. Although there are merits in doing so, you can monitor and track your progress also on your own at your own time if you have a financial timeline to look at.
- It is easier to share it with people. One of the things you can do to help motivate you to work on a particular goal is to let someone else know what you are doing. You can tell your husband or wife or a family member about your plans to help motivate you further. Also, this makes you more accountable because someone else is making tabs on your progress. Having a financial timeline written down makes it easier for you to share this with another person rather than just casually telling them about your plans. Having something to hold onto and look back to makes it more challenging and interesting.
- You get to make the necessary changes. Change is constant and as you go through life, you will find the need to tweak and adjust some of your plans to be able to adapt to changing times. Your finances are no exception and it is easier to make changes when you have a timeline to look at and adjust. This also helps you appreciate all the work and effort that you have put in because you get to see what your timeline was in the past and how you have adjusted it to address current situations.
Common pitfalls to guard against
There are a few regretful financial decisions that you will make because no one is perfect including you. But knowing some of the most common mistakes people have been making when it comes to managing their finances can be a big help in your own journey. Here are some of them and what you can do about it.
- Failing to make updates on your plans. You might have the most comprehensive financial timeline but if you never update it or even cross out some of the milestones as you move forward, you might have a hard time keeping track of what you have accomplished and how far you need to go.
- Not looking at your list for a long time. As mentioned earlier in the article, this financial timeline is of no use to you when you do not even look at it or bring it out to check for your progress. You need to constantly remind yourself where you want to be in a few year’s time so keep your eye on the prize
- Constantly changing your goals. Change is constant but if you keep changing your timeline especially the long term ones every week, you might not be able to accomplish anything. Work on your plans and make changes only when it it will benefit your goals and not because you are trying to keep up with the Joneses.
- Setting unrealistic timeline. You can have the best goals in life like a plan to save up for a house or a business but you might have unrealistic timelines. You might be trying to cram in six months what you need 18 months to accomplish. This can put undue stress on you and your family and can be a set up for failure. Have great goals but realistic and smart timeline.
Your financial timeline will help you keep track of your goals in life and guide you as you go through the hurdles in life. It keeps you focused and determined to get to where you want to be in the future and set up a strong financial environment for you and your family.