If you feel stressed about money, you're not alone. Research shows that 77% of Americans currently feel anxious about their current financial situation.
How well do you manage your money? When you get paid, how do you prioritize allocating your paycheck? Do you feel comfortable saving, investing, or otherwise planning ahead for your future?
Setting financial goals is just as important for your wallet as it is for your emotional well-being. When you feel empowered with money, this feeling can translate to other parts of your life. The opposite is also true. Money problems often coincide with relationship, self-esteem, and health problems.
Do you want to get a better grasp on your financial health? Here is what you need to know.
Financial Goals Should Align With Your Values
What is most meaningful to you? For example, do you prioritize spending quality time with friends and family? Do you enjoy travel and leisure time? Does the idea of starting your own business make you feel empowered and motivated?
We all have core values that shape our main priorities. It's important to try to live congruently with these values- doing so increases happiness and cultivates self-esteem.
Ideally, your goals should correspond with your main values. If you know that you want to attend college, it's wise to consider looking into financial aid options. Similarly, if you seek independence, it might be time to start researching the cost of living on your own.
Remember that values also change over time. For instance, you may have not have cared about commuting an hour to a high-paying job at one point in your life. But, several years later, if you now have a family and the traffic has only worsened, you might want to consider a remote or closer-to-home position.
Financial Goals Need to Be Realistic
Like anything else, your money plans should be feasible. They should challenge you appropriately. If you have grandiose visions about what you want to obtain in the next month or year, you may feel disappointed by more lackluster outcomes.
Consider how you can break down larger plans into smaller, action-based steps. For instance, let's say you want to eventually buy a car. Unfortunately, you're in a significant amount of debt at the moment.
Smaller, action-based steps might include:
tracking all income and expenses.
eliminating unnecessary spending.
making higher payments towards paying off your debt.
calculating your estimated car down payment.
creating a savings account for your car and related expenses.
getting the car.
Remember that each step needs to be practical and measurable. If you're vague, you might not know how to properly assess whether you've met your goal!
What Are Some Common Types of Financial Goals?
Your relationship with money is unique, and it's important to honor your individuality when it comes to determining what you want to achieve. That said, here are some common goals you may benefit from setting.
Creating A Budget
Budgeting is a fantastic way to better assess your financial situation. If you don't know how much you earn (or spend), it's hard to create realistic goals for your future.
Don't procrastinate having this invaluable insight. Such knowledge can help you reevaluate certain habits and make reasonable changes if needed.
When examining your budget, think about areas to reduce excess spending. For instance, can you cut down on ordering takeout? Are there are any subscription services you no longer use and can eliminate?
Paying Down Doubt
The average American is $90,460 in debt. This number includes all forms of debt, such as mortgages, student loans, and credit cards.
However, debt can have a way of snowballing your plans and derailing your future success. Making a plan to tackle your debt- even if you only make a few changes- can make a significant difference in your financial well-being.
Saving For Emergencies
Whether it's an unexpected injury, strange car noise, or a flooded garage, emergencies happen. It's not a matter of if they happen- it's a matter of when.
Therefore, it's a good idea to build a nest egg for yourself. In addition, growing your savings account can reduce the inevitable dread that will arise when something bad happens.
Starting Investing
If possible, try to consider the benefits of saving for your future self. Even just allocating 5-10% of your paycheck now can pay off tremendously later.
Investing in your company's 401(k) plan or your own Roth IRA allows you to save money while also reaping lucrative tax benefits. You can't touch the money until you're older, but planning can provide tremendous peace of mind.
Final Thoughts
Setting financial goals can bolster your physical and emotional health. If you're receiving help with a mental health concern, improving your relationship with money can be an important part of your overall treatment plan.
At the Mental Health House, we support individuals and their loved ones with their journeys towards becoming their best selves. We are here for you! Contact us today to learn more.