Q: I never have any money left over after paying my bills to even think about financial goals. I'm frustrated because I know I have to do more than just think about my future. Can you help?
A: It's not how much you make, but what you do with what you've got. Proper money management doesn't involve a magic formula to find more money; it simply means getting the most from the money you have.
Before you can begin to manage your money, you need to identify and write down what is important to you and use your list to help you determine goals for your money.
Next, turn these ideas into SMART goals. Most people's money problems occur because they don't clearly know what they want to do with their money and therefore spend it randomly. Clear goals are the targets you are aiming for to help you build your plan. SMART is an acronym for:
Specific: Set clearly defined goals.
Measurable: Review your progress regularly.
Attainable: Set goals within your reach.
Realistic: You need to have the ability and commitment to succeed.
Timely: Set goals with a clear end-date.
There are three common mistakes many people make when they set financial goals:
- They focus on the end result instead of how much they need to set aside each month
- They set too many goals to begin with.
- They get frustrated and give up when they are having a hard time staying on track.
Managing money and setting clear financial goals are a lot like learning to ride a bike; there will be bumps and bruises along the way, but it gets easier as you get the hang of it and practice.