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University life can disrupt your financial planning abilities, with student loans and money from your parents, you might forget that the importance of managing your money. However, things will change as you make a step onto the property ladder or realise that you need a car for the daily commute to your graduate job.

Everyone will have their own individual financial goals, but no matter what they are, effective money management can help you meet them. Here, stocks and shares ISA provider, True Potential Investor, share their tips for managing your financial goals.

Determining your goals

Goals can vary depending on you desires or personal situation. Common goals tend to be physical items or experiences such as a home, car or holiday.

It would also be wise to have long-term goals such as putting money aside for your pension. Although thinking of your retirement now may sound absurd, planning early is crucial to ensuring your comfort in later in life.

When you are determining your goals, ensure that they are achievable and realistic. You don’t want to leave yourself without and cause a strain on your finances. A good tip is to categorise your goals based on timescales. For example, a short-term goal might be buying a car, while a long-term goal could be contributing to your personal pension pot.

Ensuring your goals are quantified

Deciding on what you would like to set money aside for is an easy task, but failing to quantify this goal will increase the likelihood that it won’t be reached. To ensure you are in good stead to achieve your goals, you should decide roughly on how much you need and when by.

Be realistic with your timescales – choosing a large amount over a short period of time could be unachievable and place unwanted strain on your current finances or resources.

Starting to budget

By evaluating your current financial situation, you can decide how much you can comfortably put away each month. Create a list of your current monthly income and work out your monthly expenses. Categorising your outgoings together —such as housing, utilities, transportation, food, and entertainment — will make it easier to make sense of your current situation. Make sure that you paint a true picture of your finances.

A good way to start budgeting is to look for non-essential extras that you could eliminate from your spending – could you replace your daily coffee shop coffee with a homemade one instead? Work out how much you can afford to put away each month, without stretching your finances too far.

Choosing a saving or investment method

The next step to reaching your goals is to choose the best method for you between saving and investments. Saving is perhaps the method that you are most aware of, as it is the process of putting money aside. You’ll likely receive a small percentage of the amount in interest. It involves little risk but could mean it takes you longer to meet your aims.

CashIndividual Savings Accounts (ISAs) are a popular choice for saving funds – they offer a tax-free way to save. This means you won’t pay any tax on the interest that your account generates.

Investment has a greater level of risk than cash savings but it could help you meet your overall aims sooner. If you choose this option, you’ll invest your money into an investment vehicle, which includes a range of assets to potentially increase funds over time.

Stocks and Shares ISAs are one investment option that you could look at – they are a way for you to put money aside to invest with the aim of growing the fund. Here, you could get out more than you pay in but you must consider the associated risk as you could get back less than you initially put in.

It’s also wise to consider long-term goals, like contributing to your pension even though it may seem a long way off now.

To sensibly evaluate what the most suitable investment method is for you, base your decision on what you want to achieve, the timeframe you want to achieve it by, the level of return you’ll receive and the associated risk.

*With investing, your capital is at risk. Investments can fluctuate in value and you may get back less than you invest. Tax rules can change at any time.

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