There are a number of people who set out financial targets at the start of the year. This can be part of a bigger list which includes things they want to accomplish for the year. Most of them would have health targets on top of that list. Most would be trying to lose weight, sign up for a gym membership, or even buy new clothes to help them exercise throughout the week.
Some would even try to start up their own business and set out to accomplish small steps throughout the year. There are even people who aim to fix broken personal relationships with people that matter to them. This just goes to show that the start of the year is a great time for people to set out goals. It provides them an opportunity to start anew and work on a target.
This includes financial targets which are set out at the start of the year. People would spend time writing down goals they want to achieve when it comes to their finances. The most common would either be trying to save money or paying down a big financial obligation. Then there are those who are simply trying to improve their current income to help their budget.
Financial goals play a big part in your success and how fast you can reach your long-term goals. This makes it all the more important to ensure you are on track with your goals. It would be difficult to find out at the end of the year that you were way off your target. As the first quarter of the year is up, it is a good time to check and re-visit your goals.
Assess your current situation
To help you check your financial targets, the first thing you can do is assess where you are at present. Do not look at your targets first. Just focus on where you are at this point with your finances. A good place to start is your household budget. This is an important financial tool which will help you understand your finances better.
Your budget can tell you a lot about your current financial position. Look at your expenses if they are still the same as when you started the year. Did they go down or increase in the past months? You can also take a look at your income and see how well you are bringing money into your budget. Is it the same or did it go up significantly from the start of the year?
You can also look at your various accounts and check on their progress. Do you have a separate account for your emergency fund? How much is it this point? How about your retirement fund? Have you been putting money in your 401(k) and other IRA accounts? If you made investments at the top of the year, how are they doing now?
Benchmark your progress with your financial targets
Now that you have an idea where you are exactly with your finances, it is time to put them side by side with the targets you set out at the start of the year. This will help you understand your progress for the last few months. Take out your list of targets you want to achieve for the year with your finances and start comparing.
If you wanted to pay down your credit card in full this year, take a look at how much you have paid off in the past months. Not only that but you also have to look at your expenses. You have to make sure that you are not charging expenses as much as what you are paying down every month. This will negate your payment efforts and put you back in square one month after month.
If you have a target amount of money you want to save for the year, take a look at how much you have set aside this year for that. Are you well on your way to achieving your goal or are you veering off your target? More than looking at what you already have, look at your expenses as well. If they increased, you will have tougher time-saving money. This is why it is important to have a comprehensive and honest assessment of finances before benchmarking your targets
Make the necessary changes
Now that you have an idea of how you fare with your financial targets, it is time to make the necessary changes to help you get to them at the end of the year. You have to understand that when you set out a target, there will always be situations or circumstances which can challenge that and make it hard for you to reach them. What you have to do is persevere and not let these challenges derail you from reaching your goals.
This is why it is important to regularly make a review of your goals and where you are at present. This is to help you implement the necessary changes to get you back on track. If you are way off-course with the amount you wanted to save for your emergency fund, you need to start making some changes with your finances.
One thing you can do is lower down your expenses to help you free up some funds in your budget. You can then use that money to become more aggressive in saving for emergencies. It is also a possibility to look for ways to increase your income every month. This way, you can put more in your emergency fund and reach your target for the year.
Combining a reduction in your expenses and an increase in your income usually helps you get back on track. However, there are other areas of your life you might have to change as well. You can lower your expenses but if you keep on buying unnecessary things, it would still put you in a difficult situation. Check your attitude and behavior as well when making changes in your finances. This will help bring you closer to your financial targets.
Know your priorities
You could have set out a goal at the start of the year but there will be times when your priorities in life could shift. One example is that your initial plan was max out your 401(k) to take advantage of a matching program at work. This is actually a great goal to help you earn free money and maybe even retire early.
However, you noticed that the specific industry you are in seems to be headed into tough times. This can result in a tougher time at work or maybe even losing your job. This will be a challenging situation especially when your main source of income will be impacted soon. This a perfect time to shift your financial priorities.
It might be a good decision to be more aggressive with your emergency fund until the problem in your industry passes by. This will help keep you afloat in case you do lose your job. Besides, it would be difficult to save for retirement when you do not have a job. You can also start to invest in yourself and learn a new skill. This is important as CNN shares that 4 out of 10 adults cannot cover an unexpected $400 expense.
Diversifying your skill can help you weather professional challenges. This is because you either increase your chances of being retained at work or even improve your chances of landing a job elsewhere. This can help keep your income steady and allow you to focus on your goals.
There are a number of financial targets you could have set out early in the year which you need to review at present. Doing so will give you the ability to make the necessary changes to help you reach your goals at the end of the year.