Renting a home can make it challenging to feel in control of your finances. Making ends meet can be tricky with rent, utilities, groceries and other expenses to consider. To achieve your short and long-term financial goals, it’s important to have a financial plan in place.
Let’s look at how to set financial goals and create a plan to achieve them.
Let’s break it down: What is a financial plan?
At its core, a financial plan is a roadmap for managing your finances. It helps you assess your current financial situation, set goals for your future, and create a plan of action to achieve those goals.
A financial plan can be as detailed or simple as you’d like. A basic plan could include budget and savings, or you could take it one step further and include investment strategies, retirement or debt management plans.
It should also help you achieve security in your life, especially while renting, as it’s there to help you stay on track with your finances and plan for future expenses.
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Step 1. Assess your current financial situation
Before building a financial plan, you should know where you stand. How much money do you make? What assets do you have? Have you checked your credit report and score? Consider using a budgeting tool to track expenses and income.
Step 2. Set financial goals
Setting financial goals can help you stay motivated and focused. When setting financial goals, it’s important to make them SMART; Specific, Measurable, Achievable, Relevant, and Time-bound. Here are some examples of financial goals you might set while renting:
- Save for a down payment on a house within the next five years
- Pay off credit card debt within the next two years
- Build an emergency fund that covers six months of living expenses within the next year
- Start investing in a retirement account within the next six months
Step 3: Create a plan to achieve your goals
Once you understand your financial situation and goals, it’s time to create a plan to achieve them. Include specific actions, timelines, and milestones in your plan. For example, if your goal is to save for a house, your plan might involve setting aside a monthly amount, reducing expenses, and researching home-buying programs. Here are some tips for creating a plan:
- Focus on your financial goals: Prioritise and conquer one goal at a time. Move on to the next only after you’ve achieved the first.
- Slash your costs: Find ways to trim costs and funnel more cash towards your objectives. Think cutting back on dining out, ditching unused subscriptions, or downsizing your digs.
- Boost your cash flow: Score some extra dough by hustling on the side, haggling for a raise, or unloading unused items for cash.
- Create a budget: Get on track with your expenses and goals by creating a killer budget! Use your income and expense lists from Step 1 to ensure you’re allocating enough funds towards what matters most.
- Save effortlessly: Set up automatic transfers from your main account to a dedicated savings account and watch your money grow without lifting a finger.
- Stay on your game: Set reminders and use apps to track your financial progress like a pro!
Step 4: Reassess and adjust as needed
Don’t let your financial plan fall behind! Keep it on track by reassessing and adjusting as needed. Tweak your budget, modify your goals, or explore new income streams. Be proactive and stay ahead of the game.
Don’t forget the unexpected! Medical bills, car repairs, and job loss can happen to anyone. Be prepared with an emergency fund and adjust your financial plan accordingly.
How does your rental situation affect your financial plan?
Don’t forget to factor in your tenancy when planning your finances! Moving soon? Be ready for new rental bonds and potential rent hikes. Have a furry friend? Budget for a pet bond or higher rent. No car? Consider public transportation or ride-sharing costs. These tips will help you stay on top of your finances like a pro!
Stay motivated and accountable
Get a support system! Whether it’s a friend, family member, or financial advisor, having someone to keep you on track and provide guidance and encouragement is key. Celebrate every milestone and progress you make, and don’t hesitate to adjust your plan as needed.