Setting goals is one of the most important steps towards achieving financial freedom. It’s pretty easy to get bogged down in the daily details and pressures of life, but setting effective financial goals helps you focus on the big picture.
Failure to set financial goals, be it financial goals set in your 20s or retirement financial goals in your later years, would mean you will spend what you get mindlessly and have nothing much to show for your labor.
Knowing how to set financial goals and achieve them is key to achieving great successes in life. But you just can’t pick any old financial goal list and try to implement it. Instead, you need to set financial goals that are relatable to you. It helps to be realistic.
Is it Easy to Set Financial Goals?
Setting financial goals that guarantee success is easier said than done. Those who end up penning something down, fail to implement, making goal setting a mere wish list. Fortunately, there are proven techniques that will help you set and work towards your financial freedom goals.
What is the Most Important Financial Goal That Must be Set First ?
There are many financial goals to set, but the biggest and the most important long-term financial goal for most people is saving for retirement. As a rule, you should save at least 10-15% of your monthly pay-check in your tax-advantaged retirement savings account. Doing this is a very good step towards meeting your retirement goals.
When you have your retirement goals set, you’ll be sure of dealing with emergencies, stay out-of-debt, create multiple income streams, have an insurance cover for contingencies, and others.
How do you Set Financial Goals and Achieve Them?
Just like you would write down a plan on other matters of your life and business, financial goals also need to be penned down. Once everything is clearly highlighted, do whatever it takes to make them realizable. This article is a valuable guide on how to set financial goals and achieve them. It will lead you towards the right direction to reach your financial destiny soon. Read and implement the points and see how far you can go.
1. Only Set Goals That You Want to Achieve
It is important to be realistic in whatever you do in life. When it comes to finances, you want to set goals for things that are satisfactory to you and meets your needs. This way, you are sure to avoid stress and regrets that come with setting financial goals that you did not want in the first place.
Now, it is up to you to decide what you want your financial goals to look like. But first of all, you must believe in them otherwise you are not likely to achieve them. For instance, if you don’t want a home, you are likely to lack motivation should you set a goal to save towards a home down payment. Matters won’t change a lot even if you are acting under pressure to make buying a home a goal, just because your family and friends assume you will need a home in the future.
Give yourself adequate time to think about what truly matters most to you when it comes to your finances, then make a list out of it.
2. Make the Set Goals Specific and Measurable
When you are fully satisfied that the goals you want to set are achievable, have a clear definition of them. Otherwise, they will remain as wishes for as long as you live.
It helps to have a clear and true definition of success to you before setting effective financial goals. Setting vague goals will not give you something concrete to work on. What this means is that when you sit down to draw a plan of the financial goal list you hope to achieve, you must define exactly what success means to you.
If you are setting retirement financial goals, this would mean figuring out the specific age you want to retire and then determining the exact money you require to accomplish it. This way, you will be sure of how much you need to save each month to achieve retirement financial goals.
3. Financial Goals Should be Reasonable But Ambitious
So, how do you set goals and achieve them? Well, setting unreasonable goals that you are not sure to achieve is akin to setting yourself up for total failure. And it is likely to discourage you from setting more financial goals, for good.
As you make specific, measurable financial goals, ensure you give them a time frame and monetary allocation accordingly. This does not mean that you should start fearing setting huge financial goals. Set ambitious goals that and be willing to go the extra mile to accomplish them. Do you get the point?
Planning to retire at 40 when you are already 38 seems like making your objectives impossible unless you win a jackpot from a lottery. That is the idea.
4. Break Big Goals Into Small Achievable Goals
Saving for a home, for example, might require you to save over $100,000, which may take years. That exposes you to compromises and eventual failure. Rather than saving towards a goal that is way far from your reach, such as saving $100,000 for a home, it may help to save $20,000 for a home down payment every year.
It is only through choosing goals you can achieve within a reasonable time frame that you can bring the finish line closer to you. This way, you are even more motivated than waiting for your success to occur in a future you are not sure about.
5. Set a Reasonable Time Frame
Every goal you set requires a specific timeline to achieve. Failure to give your goals a reasonable deadline would mean that they may just remain on your wish-list forever.
Establishing a deadline for achieving your financial goals is a good way to make yourself a disciplined financial goals tracker. This is the only way you can monitor your success to ensure you are headed in the right direction. Additionally, it gives you something to look forward to so you have much inspiration to hit the deadline you have set.
Also, find out exactly what you need to achieve the set goals within your set time frame. Most successful people will tell you that financial goals and strategy work hand in hand.
If you want to achieve the $100,000 goal for homeownership within 10 years, you can calculate to determine that this means you would need to save at least $10,000 annually for the next ten years, right? If it seems impossible, you can make adjustments as early as possible because time keeps on moving fast. Decide to do a side gig or move to a cheaper apartment in the meantime.
Ideally, deadlines should be no more than a few years. If certain goals are taking longer to accomplish, then it is at this point that breaking bigger ones to small achievable goals comes in.
6. Monitor Your Progress
Tracking your progress is yet another great step towards setting financial goals that guarantee success.
It is imperative to monitor how things are moving so that you can adjust your goals appropriately in the instance you stray off the course. Fortunately, there are many online apps can help you track your savings progress. You could also go for spreadsheets to help in tracking your progress. Apart from these, innovate creative ways through which you can visualize your success.
Whatever approach you choose, just ensure that you have a way to visualize your progress as you get closer to success. This way, you remain motivated about the strides you are making, and easily identify setbacks and adjust appropriately.
Time to Go for Success!
You are now in the know that setting financial goals that guarantee success is easier than you can imagine. A hawk-eyed reader must have noticed that the trick to financial success lies in the acronym “SMART”, which stands for Specific, Measurable, Achievable, Relevant and finally, Time-bound.
First of all, put everything on the table and figure out which matters the most. Sort out what’s within your reach, and be realistic while you do this. Then create a realistic budget or save towards achieving the set goals.
If a few dollars remain, direct them into a separate account, one that is specifically designed to cater for other things on your list of priorities. But always ensure that you monitor the progress to avoid straying off course.
That said, it is important to set, prioritize and reach your goals. It is never too early nor too late to start saving, and this is where most people go wrong. There is a tendency to think that because retirement is decades away, you can start saving when years progress, or when you start earning a big salary. You’ll be glad you saved as early as now.