The theme for Global Money Week 2023 is plan your money, plant your future. One of the biggest struggles we have in this day and age is finding balance. Millennials and Generation Z have a “want it all and want it now” culture. How do we approach our personal finances in a way that creates a balance between short-term and long-term goals, Investment and spending or growth and security?
Start with your long-term financial goals
Begin by setting your long-term financial goals, such as saving for retirement, paying off debt, or buying a home. Once you have a clear idea of your long-term goals, you can create a plan to achieve them. I would also encourage you to use the Eisenhower Matrix to determine your most important goals. On average goals are long-term because of how much they cost rather than how important they are to people. One way to get better financial outcomes is to have long-term goals.
Break down your long-term goals into short-term goals
To achieve your long-term financial goals, you need to break them down into smaller, achievable short-term goals. For example, if your long-term goal is to save $10 000, set a short-term goal to save $1 000 in the next year. Things such as entertainment, clothing holidays and whatever else people spend their money on comes up somewhere between daily and weekly. If you only look at your long-term (important) goals once a year, they are likely to get less attention than something that comes up daily or weekly.
Create a budget
A budget is a critical tool for managing your finances and balancing your financial goals with your day-to-day expenses. Start by listing all of your monthly income sources and then categorize your expenses, such as housing, food, transportation, and entertainment. Allocate your money according to your goals, and make sure to prioritize your expenses accordingly. People think of budgets as being restrictive but budgets are really plans for what matters to you. If you love to party then partying should be within your budget. That way it won’t take you out of budget.
Prioritise your spending
Prioritising your spending can help you make the most of your money and achieve your financial goals. For example, if your long-term goal is to create a significant investment portfolio, prioritise making transfers to your investment account over discretionary spending on entertainment or luxury items. You cannot do everything at once.
Track your progress
Regularly tracking your progress towards your financial goals is paramount. Financial plans, budgets, goals and prioritising are all about directing your behaviour. You need to measure something to be able to improve it. So make sure you take time to see if you are behaving as you planned to behave. Use a financial tracking app or spreadsheet to monitor your progress.
Find ways to cut costs
Finding ways to rationalise costs in your day-to-day life can help you balance your financial goals and day-to-day expenses. For example, cooking at home instead of eating out, using public transportation instead of driving, or buying items in bulk can all save you money. Reviewing your financial behaviour will show you where you can cut costs.
Allow for some flexibility
It’s important to allow for some flexibility in your budget to account for unexpected expenses or changes in your financial situation. Make sure to have an emergency fund in place to cover unexpected expenses, such as medical bills or car repairs. When these things strike they can completely destroy you. While you can insure against some of these things others you cannot. Expecting the unexpected will help you massively. When COVID-19 struck we were reminded about the importance of emergency funds.
In conclusion, balancing financial goals and day-to-day life requires a combination of planning, budgeting, prioritizing, and flexibility. By setting realistic financial goals, creating a budget, prioritising your spending, tracking your progress, finding ways to cut costs, and allowing for some flexibility, you can achieve your financial goals and maintain a balanced lifestyle. And balance will set you up for the financial future you desire.