Setting of Financial Goals

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What's the thing to do after Accessing Your Financial Situation (Click HERE if you haven't read the post)? Next in financial planning is the setting of financial goals. By setting financial goals, you have a clear direction and meaning to your financial planning. Financial goals are targets, usually driven by specific future financial needs. Some financial goals you might set are:

 

  • Being debt-free
  • Having the emergency reserves (say 3-6 months of all expenses)
  • Having health insurance
  • Meeting retirement needs
  • Saving enough to get married
  • Buying a home
  • Financial protection against unexpected events such as the death of family, critical illness or permanent disability
  • Paying for your children’s education

If you noticed, the length of time it is going to take for different goals are different. Financial goals can generally be broken down into short, medium and long-term goals.

  • Short-term goals are those that could meet in one year or less. As an example, you want to save money for some new iPhone gadget within three months.
  • Medium-term goals are those that will take between one to three years to meet. For example, you want to save money for a trip to Greece.
  • Long-term goals take more than three years to carry out. One of your long-term goals could be saving for down payment for your dream house.

 

Steps To Reach A Financial Goal:Bulls-eye

When you set a financial goal, you define what you want and develop a plan for achieving it. Setting financial goals is a smart choice and will be rewarding. Instead of wandering aimlessly, you have something to strive for and a clear path to getting there. There are several steps to follow to reach any financial goal.

Your goals must specific, achievable, measurable and traceable!

It doesn’t matter at what life stage you are in, be it a graduate, or an adult at forties, you are likely to have some short and long-term personal financial goals. The key to success in achieving all of your financial goals is by setting concrete, tangible and realistic goals, and following them, and tracking your progress.

You need to rank your personal goals in order of importance, and then decide how long you have to save for each of them. Retirement could be many years away, but your short-term goals could be in a year or two. Determine how much you’ll need to save every month to meet your financial goals. Don’t feel discouraged if the dollar amounts seem astronomical. Most importantly is to have a set of tangible financial goals to work toward.

You should check your progress on a monthly or quarterly basis, and fine-tuning your plan from time to time. If you aren’t meeting your goals, recheck your financial budget to see if there are any areas where you can cut expenses to free up money for savings. In addition, use this plan to divide any windfall amounts you may receive–from bonuses, tax refunds, and so forth.

smart goalsBefore you think about setting goals, few things followed will help. First your goals must specific, where it pinpoints something you desire to change or meet. Make sure it is achievable; setting goals too high can lead to frustration. Most importantly, a measurable and traceable goal, where you can measure and set milestones and schedules for your goals. When you apply these, you will be rewarded for your hard work.

 

Learn about Creating a Financial Plan HERE.