Achieving Perpetual Financial Exemp\-larity: Strategies for Setting Financial Goals
Bella, a 32-year-old marketing manager, found herself in a familiar predicament – buried under credit card debt and struggling to make ends meet. Determined to change her financial situation, Bella embarked on a journey towards financial stability, using the principles of intentional personal finance goal setting and the SMART (Specific, Measurable, Achievable, Relevant, and Time-bound) framework.
With a monthly net income of $4,800, Bella's living expenses and debt payments totalled $4,500 per month, leaving her with a slim margin for savings. To pay off her credit card debt in full within 14 months, Bella focused on reducing expenses, increasing income, and automating savings.
First, Bella audited her current finances, constructing a realistic budget that prioritized needs over wants and limited discretionary spending. To bring in $500+ in supplemental gig income monthly, she took on dog walking and sitting side jobs. Bella also developed an execution timeline with milestones and shared her plan with friends for accountability.
Next, Bella set focused SMART financial goals. For example, instead of vaguely aiming to "save money," she set a goal like: "Save $5,000 for an emergency fund within 12 months by setting aside $417 monthly." To build an emergency fund of $12K over eight months, she planned to budget identifiably $1,500 monthly freed by cutting dining out.
Bella's key strategies included spending less than she earned, paying off debt, building emergency savings, automating savings, and supplementing income. She tracked her expenses carefully, created a realistic budget, and regularly reviewed and adjusted her budget to ensure a positive cash flow. To pay off her $8,200 in debt across three maxed-out cards charging 19-25% interest, Bella prioritized high-interest debts first and made consistent payments above minimum amounts.
Bella also automated transfers from her checking accounts to savings and investing accounts, setting up automatic transfers from her paycheck to her emergency fund. To maintain consistency, she even set up small automatic contributions to her savings accounts.
By adopting these strategies and structuring her financial goals under the SMART criteria, Bella has created a disciplined, proactive plan towards financial stability. Her journey serves as an inspiration for anyone looking to take control of their finances and achieve financial freedom.
- Recognizing her limited margin for savings, Bella aimed to increase her income by taking on side jobs and automating savings to help reach her financial goals.
- To achieve her goal of saving $5,000 for an emergency fund within 12 months, Bella meticulously budgeted $417 monthly by cutting dining out expenses.
