Financial
Goal Setting
Four Steps To
Success
The
first step in personal financial goal setting is learning to control
your day-to-day financial affairs to enable you to do the things that
bring you satisfaction and enjoyment. This is achieved by financial
planning and following a budget.
The
second step in financial planning and goal setting is choosing and
following a course which will lead you towards the achievement of your
financial goals.
Without
financial goals and specific plans for meeting them, you will just be
drifting along and leaving your future to chance. You've probably heard
the quote: "Most people don't plan to fail; they just fail to plan."
The
end result is the same and it is a failure to reach financial
independence.
The
third step in personal financial planning is learning how to build a
financial safety net, which can be likened to having a retirement fund
for when you are no longer generating an income.
FOUR SIMPLE STEPS FOR
SETTING FINANCIAL GOALS
Step 1:
Identify and write down your financial goals, whether they are saving to
send your kids to college or university, buying a new car, paying off
credit card debt, saving for a down payment on a house, taking a
vacation or planning for retirement.
Step 2:
Break each financial goal down into several short-term (less than 1
year), medium-term (1 to 3 years) and long-term (5 years or more) goals.
This will make the process easier.
Step 3:
Educate yourself and do
your research. Read Money magazine and books about investing and
wealth creation, surf the Internet's investment web sites. Learn about
the stock market and stock selection. Yes, there is the potential for
loss, but if you do your research and get a reliable broker, you can
ensure your financial future. Remember not to put all your eggs in one
basket.
Diversify your investment portfolio. With a little effort you can learn
enough to make educated decisions that will increase your net worth many
times over. Then identify small, measurable steps that you can take to
achieve these goals, and put this action plan to work.
Step 4:
Evaluate your progress regularly. Review your progress monthly,
quarterly, or at another interval you are comfortable with, but at least
semi-annually, to determine if your program is working.
If
you're not making a satisfactory amount of progress on a particular
goal, re-evaluate your approach and make the necessary changes.
There
are no hard and fast rules for implementing a financial plan. The
important thing is to do something as opposed to doing nothing, and to
start NOW!
Sometimes when people write down their goals, they discover that some of
the goals are too broad in concept and nearly impossible to reach, while
others may seem smaller in scope and easier to achieve.
It is
okay to dream about riches, but be realistic about what you can actually
do. Try breaking down your goals into three separate time frames.
By
placing a time frame on your goals you are motivating yourself to get
started and allowing yourself the chance to succeed. Remember that you
can adjust the time frame whenever you need to.
Long-term goals (over 5
years) are those
things that won't happen overnight, no matter how hard you work to
achieve them.
Because
they may take a long time to accomplish give yourself a reasonable
amount of time based on your best estimates of what it will take to
achieve them.
Examples of long-term financial goals might include college education
for a child, a retirement plan or purchasing a home. Whatever the case,
these goals generally require longer commitments and larger sums of
money.
Intermediate-term goals (1-5
years) are the type of
goals that can't be executed overnight but might not take many years to
accomplish. Examples might include purchasing/replacing a car, gaining
additional educational qualifications or certification, or paying off
credit card debts.
Short-term goals (within one
year) generally take
one year or less to achieve, based on the date the task is needed, the
total estimated cost, and the required savings.
What are your goals?
Begin
by making a list and deciding a timeline for achievement of each goal.
Detail the steps necessary to achieve each financial goals, then take
action toward reaching those goals. It’s that simple. Check out our
article on the steps to successfully setting and achieving goals
if you want some additional goal-setting help.
The
following tips will help you get started in planning and achieving your
financial goals.
-
Begin by taking 5%-10% out of each pay check and put
it in a savings account. If possible, set up an automatic deduction
plan to achieve this. This is the start of your wealth account.
-
Research
different investment strategies such as IRA’s, stocks, RRSP’s,
mutual funds, personal investments etc. There are many more and all
can assist you in short and long term goals.
-
Start making a budget for yourself that leaves you
with some extra money and follow it.
-
Use your coupons - that is why they are there. It
seems like small savings, but added together you could save $20 -
$30 on each trip to the market
-
Shop around for bargains and don't be afraid to ask
for a discount.
-
Do not live beyond your means
-
If necessary, work with a credit counselor to get
help in lowering your monthly expenses and pay off your debt
These
are just some of the things that you can do when beginning to realize
your financial goals. Of course, you also have to follow the steps in
the other sections on how to successfully set
goals.
The
steps to successfully setting goals don’t change, only the methods that
you use to reach the goals. For example, to achieve a
career goal work to get noticed;
to achieve family and relationship goals work on maintaining your
intimacy or getting it back; in financial matters work to save and
invest money.
Remember: If you fail to plan you are
planning to fail!
MORE GOAL SETTING TIPS
AND ARTICLES
