Too often, people believe they have to do a full-fledged financial analysis of assets, income, and expenses before setting any financial goals. But, nothing could be further from the truth, according to financial professional Scott Crockett of Everest Business Funding.
The first step to understanding and optimizing your personal finances is setting financial goals. By taking the time to figure out what you want and how to get there, you’ll be setting yourself up for future financial success.
Below are some short-term financial goals you can create to help you achieve your long-term financial goals.
Set Up an Emergency Fund
There are many ups and downs in life and times when unexpected things will happen. You may get sick and be unable to work. You may lose your job unexpectedly. You may need to pay for expensive and immediate home repairs.
In times like these, the readily available extra cash will help get you by in the short term. Most financial experts will advise building an emergency fund that has anywhere from three to six months’ worth of expenses.
If this seems like a lot, don’t worry. You don’t need to build this emergency fund all in one fell swoop. Just start working toward it. Set aside even a small percentage of your extra money each month to this emergency fund, and stash it in a high-interest savings account that you can access when you need it.
This extra money will help you avoid creating potential long-term financial problems such as raising debt on high-interest credit cards.
Invest in Good Insurance
Another prevention-type financial measure to consider is investing in good insurance. Some insurances are mandatory, such as auto and home insurance. However, you’ll likely have a lot of choices for what coverage you select.
You may be tempted to save some money each month by opting for less coverage, but avoid that potential pitfall. The money you save now will pale in comparison to the money you’ll lose should you actually need to use the insurance policy in case of an accident, injury, or major damage to your home.
Again, this is all about protecting against potential financial disasters.
Keep Spending in Check
Ultimately, it’s advisable to set up a full detailed budget that tracks all of your income and expenses so that you can see a clear financial picture and set up goals. If that’s too much for you to handle mentally at this point, keeping your spending in check is a good first place to start.
Set short-term goals such as eating out one less time per week. When you see the extra money you have in your account, it’ll serve as motivation to make more progress. This will also set you up on a good path when you’re ready to create a more formal budget.
Save for a Big Purpose
Setting financial goals is only beneficial if you work to accomplish them. The challenge with long-term financial goals is that they can seem so far away that they’re unobtainable. You might wonder, for example, whether putting aside $10 a week toward retirement would even do you any good.
Scott Crockett says one way to train your mind that any savings are good savings is to set short-term saving goals around a specific big purchase. If you want to start a business, set aside start-up capital. If you want to make a down payment for a car, set it aside, so you have it in cash.
By doing this first, you’ll be better prepared to understand the value of saving for big, long-term financial goals such as retirement.
About Scott Crockett
Scott Crockett is the founder and CEO of Everest Business Funding. He is a seasoned professional with 20 years of experience in the finance industry. Mr. Crockett’s track record includes raising more than $250 million in capital and creating thousands of jobs. Scott has founded, built, and managed several finance companies in the consumer and commercial finance sectors.
