Setting Financial Goals

Everyone can agree on the value of financial security. In today’s economy, it is important to do all that you can to help secure your financial future. Once you know where your finances stand today with a basic personal budget, you can begin to implement some goal-setting strategies towards your financial future.

Why Set Goals?
Just like with anything else in your life, goals give you a focus for your efforts. Without financial goals, it is hard to plan anything. In financial situations, lack of goals can lead to short-sightedness and inadequate funds for important things like college, retirement and vacations. Now, let’s think about this some more. What are the goals you have in your life? Don’t only think about right now or next month but think about the long term; what do you want your money to do for you? It’s a good place to start.

Financial Goal Setting: Nuts and Bolts

Make a budget – You won’t know how much extra money you may have, or how much extra money you will need unless you know the present details about your income and expenses. Try to make a budget as detailed as you can to give you an accurate picture. Track your expenses for a few months and look back in your bank account and on your credit card statements to see how much money you are spending on different things.

Write your goals down – When you just have the details in your mind, they can easily get forgotten and unclear from time to time and that leads you nowhere. It is wise to use a pencil so that you can change and modify your goals as you need to while you are writing. List them in no particular order but just get them down so you can proceed to the next step.

Prioritize your goals – Now you need to focus on your most important goals. Rank them in order of importance and focus on working with the most important ones first. You will also find out through this exercise what is more important for you and which are your most pressing financial obligations.

Make your goals specific – What have you written down? If you wrote something like “I want to buy a new car,” this is too vague. We all would like a new car. How can you turn that into a strategy that you can actually implement in a timeline? Instead say, “I would like to save $6,000 towards a new car by this time next year.” Now, you have a timeline and a specific money goal.

Break them down – The above goal can even be dissected into smaller, more manageable goals. If you are having trouble making ends meet now, saving $6,000 might as well be like saving a million dollars. But, if you set a short, medium and long-term goal to reach the ultimate financial goal, you can get your head around it. Now you can figure out how much money you need to set aside each month until then to achieve your goal. You will need to decide how to adjust your budget; cut expenses and increase income to match this amount. So, here goes: “I want to save $500 every month. I also want to meet a goal of $3,000 by mid-year. At the end of the year, I project that I will have saved $6,000 towards my new car.” This is just an example. You may find many places in your budget where you can cut back and you may be surprised at how much extra money you can find.

Evaluate and re-evaluate – Every couple of months, take another look at your goals. Have they changed? Do you need to adjust them? Are you still on track to meet them by your set deadlines? If not, you can readjust the timeline to account for changes in your financial circumstances.

Work smarter not harder to achieve your financial dreams. With a little strategy you can enjoy a life full of endless possibilities. You can take charge of your finances with a little bit of planning instead of living from pay check to pay check.

Additional Resources:
Household Budget Manual
Budget and Personal Finance Ebooks
Success Magazine : What Achievers Read
Books by Dave Ramsey
The Difference: How Anyone Can Prosper in Even The Toughest Times
Find Great Lists and Organizers at Listplanit.com

Finacial Friday Link Up at The Grant Life

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