Before starting a business, it is crucial that you know how to handle your finances. It can be difficult for most people but that’s how businesses can mess up – by being reckless and clueless with handling your finances.
Handling money and starting a business have the same rules when it comes to discipline. In this article, we’ll go over how to set financial goals and how to successfully attain them.
My Story in Personal Finance
Five years ago, I thought about of how at 30, I will quit my job, and start a business.
I was longing for something different – I wanted freedom.
I can’t stay in the office the whole day, leaving me two hours everyday with things that I want to do. Two hours was not enough.
I had to strategize, set financial goals, manage my finances well. So, I started saving for my emergency fund, followed by experimenting with small businesses on the side.
Starting a business and building a passive income stream are the ways I know how to reach financial freedom.
It took me some time, but I finally got it. I am not living luxuriously, but I learned to adjust and live a lifestyle I am happy with.
Why Should You Set Financial Goals
Money runs the world, whether we like it or not. We need money to buy groceries, pay our house, supply our needs.
If your only source of income is your salary, and one day you’d like to start a business, you will need extra cash for that.
Not everyone can start a business with investors ready to pour in their money.
Maybe you need to take a course and learn more about the business that you would like to start.
Or forget about business. Maybe you want to buy a house for your family, prepare an emergency fund and pay off all of your loans.
Maybe you need money to invest.
If you haven’t started yet, you should start setting up financial goals by now. Everyone needs to have a financial goal year after year. It can dictate how you’re going to live your life.
How to Set Financial Goals
Think about your goal and your target date. Realistically, with the amount of money you are earning right now, and the target date that you want to reach your goal, how much do you have to save every month?
We recommend using the SMART goal-setting system, as recommended by the Consumer Financial Protection Bureau.
If you need help with the calculation, check out our Personal Budget Calculator.
Then set two money goals. Focusing on too many financial goals can be overwhelming. So, choose a short-term goal and a long-term goal.
How to Stick with Your Budget to Reach Your Financial Goals
Now that you got the goal, all you need to do is stick to it until you reach your target.
Here are some tips on how to stick with your budget:
Adjust Your Habits.
I started giving up going to restaurant for lunch. I’ll try to eat at home as much as possible because it saves me a lot of money.
I lived in Hong Kong and a humble meal can costs at least HKD 50 (USD 8). Multiply that with the number of days I am in the office so that’s HKD 250.
I also gave up going to Starbucks – instead, I choose the cheaper option of instant coffee. I know they’re not as good, but it gave me the same boost.
Be Creative and Resourceful.
There are creative ways on how to get the same result without compromising the things that you love. I use my credit card for my bills. That gave me enough points that will convert to cash.
This cash points would allow me to eat at restaurants or get that latte fix from Starbucks. I also use points for my flight tickets.
Keep an Expense Journal.
For you to have an idea on what you spend on, keeping a journal is a great way to track your expenses. Next time you will be more conscious and cautious.
There are free phone apps that allow you to do that. Or simply get yourself a pen and notebook and write them down.
To be honest, I’m bad at keeping record so I try my best embed habits instead into my daily life. Try it for a month. Take it as a challenge and see where it leads.
Next thing you knew, you’ve already reached your goals. 🙂