Tag Archives: money management

How to Make Realistic Personal Finance Goals

Diamond-Lighthouse-selling-goals-wood-blocks

According to Kiplinger, every person needs a steady income, financial reserves, and insurance against catastrophes, whether that’s formal insurance or a large savings or investment account. Whether you already have those things and you want to work toward a more rewarding financial future, or you’re nervous that you don’t have one or all of those things, you’ll need to set financial goals to get where you want to be.

Regardless of your current life stage, your financial goals will be dictated by your life goals. Whether you want to retire early, send your children to college, or travel more, you will need to manage your money well in order to plan for your future. In addition to developing a solid emergency fund, you may plan to have a wedding or purchase a house soon. Automatically depositing a chunk of your paycheck every week or month is one way to pay yourself first and plan for these goals.

Diamond-Lighthouse-selling-goals-woman-psyched-sunset

Setting aside money for specific goals is a good idea, but how do you decide how much to set aside, and how often? That depends on your long-term, medium-term, and short-term goals. Long-term goals may be that elusive retirement, while medium-term might be making a large purchase like a vehicle or a house, and a short-term goal might be paying off that pesky credit card. To meet those goals, you need to make them even more detailed and specific.

Applying the SMART method to your financial goals is one way to get a clearer idea of what you really need to do to make your money matters work for you. “SMART” stands for Specific, Measurable, Achievable, Realistic, and Time-Limited.

Diamond-Lighthouse-selling-goals-SMART-lightbulbs

The “specific” characteristic directly addresses the thing you want your money to pay for: the house, the college degree, or the new car. It is important to make your goal specific because then it will have meaning. “Measurable” means applying a specific amount to that goal, such as $18,000 for the car or $30,000 for the down payment for your house. Find out how much you will need to reach that goal and apply that amount to your goal.

To figure out whether a goal is “achievable” is a big challenge, and sometimes very closely linked to the “T” in SMART. A financial goal is only achievable if you give yourself enough time to do it. If you want to buy your own island in the tropics, but you only have $10,000 in your savings account, you may need to make it a long-term goal for it to be achievable. If you just want to buy some property that doesn’t necessarily need to be adorned with palm trees, you may be able to make it a medium-term goal with a starting point of $10,000.

Diamond-Lighthouse-selling-goals-coffee-napkin

But we skipped the “R!” Well, that’s because you have to know if your goal is achievable and time-limited to know if it is realistic, and that might be the most challenging element of all. For a goal to be time-limited, you simply need to give it a deadline, but how can you tell if that time limit is realistic? Setting unrealistic goals is the best way to shoot yourself in the foot when it comes to financial planning, because you can spend so much time focusing on the dream that you don’t actually see the way your money is really being spent.

Whether or not your goals are realistic depends on how well you prioritize. For example, if you want to buy a house in the next year but pay $600 in rent and $600 in student loan payments while making $2,000 per month, you’ll need to consider where you spend the remaining $800 each month. Does it leave enough to save for the down payment you’ll have to make? Furthermore, do you have good enough credit to get a homeowner’s loan? If you spend all but $50 of the remaining $800 on groceries, a car payment, a credit card balance, medical bills, and utilities and have only decent credit, you may want to re-adjust the time limit on your goal and add another goal to the mix: increasing your credit score.

Diamond-Lighthouse-selling-goals-soccer-ball

Without setting financial goals, you will not be able to pay for the things you want. Without setting realistic goals, you won’t have a clear idea of how to approach the future. So SMARTen up and start setting goals today!

avatar_99975d940e66_128

Manage Your Money From Your Phone

Great Money-Managing Apps
Diamond-Lighthouse-selling-cell-phone-cute-girl-curly-hair

If money worries are keeping you up at night, or if the mounds of bills and receipts or even URLs, log-ins, and passwords you try to keep organized are driving you bonkers, you may need to turn to your phone for help. Apple’s trademarked advertising slogan, “There’s an app for that,” has a place in the world of personal finance as well as in the world of fun.

Diamond-Lighthouse-selling-cell-phone-mom-baby-tablet

While having an app for each of your banks and credit unions is a good idea for individual accounts, you can also manage all of your accounts in one place with financial management apps like Mint, Level Money, Check, and LearnVest. CNET associate editor Sarah Mitroff reviewed several great money management apps, each with slightly different features. Check, for example, which is free on both iOS and Android, allows you to pay bills without having go to each bill pay website. While the app is free, some functions are only available if you pay a fee.

Diamond-Lighthouse-selling-super-confused-dude-iPhone

Mint and Level Money are both good for monitoring your bills and expenses, both of which will actively help you stay on track with notifications and emails to let you know how well you are doing. With this type of app, you give the app permission to connect with your bank accounts and other financial accounts, and it monitors those you’ve added. Mint is helpful for people with more expansive financial portfolios, including 401(k)s, loans, and IRAs. It constantly updates in real time, so you can see where each expense fits into your budget.

DailyWorth, a website dedicated to talking about personal finance, reviewed Mvelopes, another app that links to your bank accounts, but asks you to set your own budgeting goals. While Mint and Level Money focus on your net worth, Mvelopes lets you focus on your daily cash flow.

Diamond-Lighthouse-selling-woman-gorgeous-hot-lips-selfie

Safety is key with BillGuard, another app that will monitor your bills, but it is better for people who are concerned about fraud activity or incorrect charges on your account than for people who aim to focus on their budget.

If you are not comfortable with connecting your bank accounts directly to a third party app, something like Expensify, with which you manually enter your payments and expenses, may be more suitable for your needs. PocketExpense also lets you monitor your expenses without having to link your bank accounts. You can enter expenses manually to monitor how much you spend, where you spend it, and when. The app then breaks down expenditures by category that you can visualize using a chart generator within the app. GoodBudget is another free app that helps people who budget based on income and outgoing expenses by using “envelopes” for changing elements of your budget, like holiday expenses and vacation savings.

Texting-Happy

In addition to budgeting apps, you can take better control of your money situation with other apps that deal with your finances in different ways. DigitalTrends.com magazine recommends using apps like Slice, which help avid shoppers monitor their habits, or Credit Karma Mobile, which monitors not only credit scores, but things that may affect your credit score. SavedPlus is a great way to help you passively save money by automatically moving an allotted percentage of the amount you spend from your checking to your savings account.

In addition to tracking spending on your own, sometimes you have to track the expenditures of the group you’re with. For that, Tricount can help you out by splitting up the expenses for you. If you only need to pay someone one time, Google Wallet, Venmo, and SquareCash are all apps that allow you to pay another person directly using only their e-mail address. Venmo even allows you to pay with credit cards, but takes a three percent transaction fee.

With the proper use of these apps, you hardly need a financial planner to help you get on top of your money situation and begin to have a realistic view of your incoming cash and outgoing expenses. Help secure your financial future from your phone or tablet with these apps that feature attractive interfaces.  They are way more fun to use than a paper-and-pen expense book, and definitely better than a spreadsheet.

Diamond-Lighthouse-selling-man-old-texting