Goal setting is a powerful tool. We have all wanted to live a life where we do not have to worry about our finances. Money plays a vital role in all our day to day decision making. We often think of buying our own house, having that sedan, and life of means but seldom think of how we will do that. The main difference between a dream and a goal is a timeline and a plan of action. Wanting to buy a house is a dream, but having a clear and measurable plan along with clear milestones and timelines is what makes it a goal. ChatwithNerd is one such budgeting bot to help you manage your money. Let us look at some of the things to keep in mind while setting money goals.
Divide it into sections
The first and most important part of setting a goal is to break it down into sections. You will have various dreams. Some will be luxuries like going on that foreign tour while some will be necessities like having a decent-sized emergency fund. The first thing that you should do is write down all your goals clearly and concisely. If you want to save for an emergency fund, mention your wish to have in the fund. If you're going to go on a vacation, say precisely the kind of place you want to go and what type of budget you are looking at. Then divide all these goals into different sections like a necessity, plans, dreams, etc. You can even use a money management app online if you are confused about which areas divide your goals.
Use SMART
Smart is an acronym used to define your goal setting. It stands for Specific, Measurable, Achievable, Relevant, and Time-bound. Whenever you write down any goal, you should filter it through this screen. You should clearly understand if your plan fulfills all these criteria. If you think your dream is achievable, you should have some rationale to explain how.
Understand what matters to you more
One you have divided your goals into sections and put them up on a money management app online, you should now prioritize. Since you will have a limited amount of disposable income at any given point that you will be able to save for your money goals, you should plan your goal timelines accordingly. You might want to focus more on the necessities section in the beginning. Having clear plans in this way will help you measure your progress and prevent you from spending money on something of lower priority and then later regretting in case of an emergency. When it comes to money, the most important thing becomes being in control. As the old saying goes, 'Money is a great servant, but a terrible master.'
Keep a timeline
Even though we have talked about keeping a timeline in the Smart section, it is worth discussing how to decide a timeline. Any timeline that you keep for a goal should be realistic and calculated. Use a money management app online that also allows you to add a timeline and milestones to your goals. Let's take the example of the emergency fund goal. If you wish to have an emergency fund, add Rs. 4 lac to it, and then leave it in a fixed deposit to retain its value over time, you should think about how much you can contribute to the fund each month. If you can add Rs. 10,000/- to the fund each month, then three years would be a realistic timeline. Now you will also want to think if the timetable for something is too far off or manageable since to achieve this goal in the lesser time, you will have to add more than Rs. 10,000/- each month, which could mean compromising on contributing towards some other goal.
Review Regularly
Once you have set down your goals, it is time to start acting on them and measuring your progress. The success of any purpose should be judged throughout its journey. Let us again take the example of the emergency fund. If you wish to have Rs.4 lac in your emergency fund in 3 years, you should have around Rs. 2lac in your emergency fund in one and a half years. If you do not even have Rs. 50,000/- by the end of a year and a half, then you should try to figure out where the problem is and fix it. You can even set reminders on a money management app online to send you notifications if you do not contribute to a money goal on time and motivate you to be on track.
If you are looking for a money management app online that can help you a lot with being much better aware of your finances, then do check out 'Chatwit Nerd.' It is one of its kind app that allows you to record and keep track of your finances efficiently. All you need to do is send a text about your recent transaction, and it will automatically add it to the relevant category. You can also check reports on your spending habits and better manage your expenses. Visit www.chatwithnerd.com and sign up now!