Setting a financial goal as a low income earner is a way of making a vision for your financial state to come true. At times without goals, you might not know what financial success looks like.
In this article, we will be discussing how to set financial goals as a low income earner;
What is financial goals?
Financial goals are like road maps that helps you reach your financial destination, access whether you are on track and helps you define how you want to commit to your financial state daily, monthly or annually to reach a desirable achievable goal. Financial goals should be smart, specific, measurable, attainable and time bound.
Types of financial goals
Independent goals: This type of goal is aimed at helping you reach financial independence so that you can support yourself when you decide you are ready to stop working. This include investing in some type of income producing asset that will continue to grow overtime. It also takes longer time to reach this particular goal. Therefore, you need a lot of patience and planning to see these type of goals to fruition.
Stability goals: This type of goal helps in life inevitable options. These type of goals are important because life happens. It is crucial to build financial stability over time. This will assist you to achieve bigger financial goals you need to accomplish in life. A good example of this goal is having life insurance, health insurance and emergency funds so that you can be able to support yourself when something happens to your income.
Lifestyle goals: This type of goal helps you set aside money for your vision and experiences you wish to have in life. Lifestyle goals are great and helps us spend money on what really matters to us personally. Think about what you want your life goals to be. Learn to build your budget based on the life you want and stick to your money plan. By doing this, you are less likely to overspend because you are staying in alignment with what you want to do in your life.
Growth goals: A growth goal is investing money back into yourself to help you grow as a person. This is investing in your skills, knowledge, mental and physical health. Money spent investing in your growth is absolutely money well spent. Examples of these is attending college, investing in gym memberships, personal trainer, continuing education, coaches and mentorships.
Importance of setting financial goals as a low income earner
Setting financial goals is key and important to any kind of wealth you want to acquire as a low income earner. Without goals there will be no motivation to save and your savings pattern will not match your lifelong plans. Some of the importance are;
- To figure out what you want, might be a house or a car.
- To calculate how much you need every month to hit your financial goals in less amount of time.
- To identify financial goals be it long or short term.
- To draw clear road map on how to achieve your written goals.
- To determine realistic expectations in your financial life.
- To set goals that you can actually work towards
- To motivate yourself on how much you need to save up for your goals to come to reality.
12 ways to set financial goals as a low income earner
- Set your financial goals around a theme: Think of a concept that relates to your financial health.
- Evaluate the management of your finances: Start taking your budgeting seriously. Prioritize savings and organize your money in a way that will reflect you are not falling behind your debt.
- Suppress bad money habit: Suppress bad money habit like too much shopping for random items like clothing, groceries or gadgets and ordering take outs multiple times in a week. Recognize triggers for bad money habit and work on them or implement something that is going to stop that thing from triggering you.
- Remove financial road blocks as a low income earner
- Get bargained with your money through budgeting: Give your money a purpose and intention by monitoring how every dollar is being spent. Aim to become a financial expert with your money and learn to allocate your money appropriately.
- Check your spending patterns: Dive deep into your spending habits, determine to make a change. Be aware and see your finances getting better.
- Create a financial plan: Draft out a plan that outlines what you want to accomplish with your income. A written out plan detailing exactly how you want to reach your financial goals. Look at where you are now and where you want to be in the next 5 to 10 years. Depending on how many years you want to achieve your goals.
- Pay off debt: Whether you have credit card debt, student loans, car loans, it does not matter. Make it a goal and priority to pay off your debt as a low income earner. Work on paying off your debt with easiest method that are more relatable to you.
- Start tracking your expenses: There so many resources and tools available for anyone to track their expenses. Tracking your expenses helps you see where your money is going. Always stay in line with your money and plan your income for the month.
- Save for emergencies: Unexpected bills can put a strain on your finances or put you in a bad financial situation. It is important to save for emergencies with a separate account because anything can come up anytime.
- Pick up a side hustle: Pick up a side hustle in addition to your current job to increase your finances. Having the flexibility of more money will have you reach your financial goals faster as a low income earner.
- Start investing: Investing is one of the number one way to secure your financial future. You can start investing in the stock market, index funds, mutual funds and stocks. There are lots of free apps you can use to invest, take advantage of this opportunity and utilize it well.
In conclusion, setting and achieving financial goals as a low income earner takes a lot of determination. Pick up a financial goal you want to accomplish, select and choose a very clear plan to achieve your goals. Track and monitor your progress to ensure you are on pace to complete your financial goals.
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