If you want to achieve a peaceful financial life, then you should choose the right financial goals that you can work toward. Once you set the right financial goals, it will help you achieve them easily instead of wasting time wandering about the goals aimlessly.

However, setting financial goals may sound easy but can be daunting. You have to set goals that are achievable. If you set goals that are not specific, attainable, and realistic, then you may end up losing your precious time and energy. If you think you are unable to manage your personal finances, consider financial coaching to get the right vision.

However, setting smart financial goals is not rocket science. You can do it. Read this article; this might help.

1. Formulating the right budget

You have to create a budget. Because it is the first step to understanding what you have and how much money you can spend. So, create a budget to keep track of your money. Analyze your monthly expenses carefully, to find out the items on which you’re spending unnecessarily. Cut down on these expenses to save more money on a regular basis. Make sure you create a realistic budget unless you may feel demotivated.

2. Repaying your high-interest rate debt first

If you’re in debt, you will not be able to achieve any financial goal. You can’t save money for rainy days. You can’t even save for your future. As a result, building wealth becomes next to impossible. So, you have to try to pay off your current debts so that you can start living a debt-free life. The best way to get out of debt is to repay your high-interest rate debts, especially high-interest rate credit card debts. 

As credit cards carry sky-high interest rates, make sure you repay these debts as early as possible. By doing so, you can save your credit score from being hurt as well. Use your saved money to pay off debts after calculating the debt amount through a credit card debt calculator. 

If you think you can’t repay the whole debt, you can settle your debts. A professional debt relief company can help you deal with the debt settlement process. You can follow the debt avalanche methods to repay your high-interest rate debts.

3. Living within your means

Living on less helps to save more. It will help you build wealth in the long run too.

You can cook your own to trim the cost of expensive dining out. Try to carry homemade breakfast and lunch to save money on Starbucks. If possible consider public transport to save money on gas. Unsubscribe from memberships that you don’t use. Also, find other ways to cut down on your extra expenses. This will help you save more.

4. Saving money to build an emergency fund

Once you get out of your current debts, you should try to save more. This will help you regain the confidence needed to achieve your next financial goal. Saving money is also important to create a fund for rainy days. Once you establish a fat emergency fund, you can concentrate on building wealth to secure your future. Once you are able to save money, you should try to build an emergency fund to avoid losing money on surprising expenses. 

Remember, life is uncertain; you should be prepared for emergency expenses like job loss, accident, natural calamity, and illness. If you have money in your emergency fund, you can use that to fight these expenses. Otherwise, you have to use a credit card or take out loans to manage emergency expenses. Make sure you save 6-9 months of savings in an emergency fund to avoid financial disaster.

5. Create a simple investment portfolio

Securing the financial future is important. If you don’t save money for your future, you will not be able to maintain your current lifestyle when you will not have income. Thus, you should try to grow money to secure your financial future. To do so, you have to make investments. Try to create a simple portfolio while investing. This way you can avoid financial risks. Choose 3-4 index funds to get a favorable kind of exposure. Low-cost mutual funds and ETFs can be a good choice.

6. Saving for your retirement days

You should open a retirement plan to grow your money. Opening a 401(k) account properly allows you to take advantage of tax benefits while saving money. Don’t withdraw money from your retirement savings fund. Otherwise, you may have to pay a penalty. Wait until the age of 59.5 to get the full advantage of a retirement savings fund.

7. Setting up an automatic savings system

Try to set up an automatic savings system so that your money can be automatically transferred from your salary account to a Roth IRA or a retirement account. You can also open a savings account with a trustworthy bank and opt for the option where a certain amount of money gets deducted as soon as you receive your salary.

8. Getting health insurance

You should find a suitable health insurance policy to keep yourself as well as your family members protected. It is also not at all possible for you to bear all the medical expenses from your own pocket in all situations. 

As such, the need to buy a health insurance policy arises. Shop around thoroughly and compare policies between different companies so as to get in touch with an affordable one and buy it at the earliest possible and keep yourself and your family members protected. 

Being a buyer, you will have to make the decision as to whether you want to reduce the premium cost of your health plan by selecting a higher deductible or you want to increase the premium amount by choosing a lower deductible. If you find it difficult to come to a decision on your own, you may take the help of your insurance agent who will be able to guide you so that you can choose the best option as per your requirement.

9. Check your credit score from time to time

Your credit score is the most important factor that is taken into consideration by the lenders before lending you a credit card. With high-interest rates, the monthly payments on a credit card will also be huge. Since there may be cases of credit card defaults, lenders check their credit score before lending credit cards. 

A good credit score implies good personal finance management and timely and regular monthly payments. However, a poor credit score will make lenders skeptical about your repayment ability and they may lend you a card, but with higher interest rates making it more difficult for you to repay.

10. Maintaining a good credit score

You must be aware that today’s lending industry is totally based on credit. To obtain a new line of credit, a person must maintain a consistently good credit score. As your credit report is proof of your financial history, the lender will first check it to determine the amount of risk you can be when it comes to repaying the loan. A good credit score implies that you have been managing your finances well. On the other hand, if you have a poor credit score, your lenders will most likely lend you a loan with highly unfavorable interest rates.

Lastly, if you have too many financial goals, then you may have to track them from time to time. Otherwise, you may get lost. Remember, staying focused on goals is equally as important as choosing smart goals. Thus, you should reward yourself from time to time to stay motivated toward your financial goals. You can also share your financial journey with a close person who can appreciate your effort.