Financial goals are as same as having normal goals – e.g. gain or lose weight, achieve 42km marathon etc.. In reaching financial goals, you will push yourself to the limits of emotion and financial goals need also goal setting. If emotions were not taking care of, surrender of one’s goal will be a choice and we may end up living to pay checks. Achieving your financial goal is easier said than done. But did anyone tell you that is not difficult to meet your goals?
To my valued reader, setting up your financial goal is a step towards financial health. As mentioned before in our previous article (“Do I need a financial plan?“), goal identification is an integral part in Financial Planning. Without knowing your goal, you’ll be like drifting on the sea without knowing where to go. We don’t like that, do we?
Before setting up, we must define what financial goal is. Financial goal is a target you need to achieve in relation with money. Saving up money for child’s education and finishing off debt before retirement are examples of financial goal.
Goals can be short-term, medium-term and long-term based on the time duration. Short term goals can be attained within short period of time. Examples are setting a percentage in saving your income and adjusting your spending habits. Medium-term goals can be attained from one to ten years. Saving up to buy a house and taking a dream vacation are examples to Medium-term. The ultimate goal will be on long-term where it took more than a decade. Funding for retirement and living debt free are two of the ultimate goals in life.
After defining the financial goals, here are the steps in creating your financial goals.
Setting up your financial goals
- Be self-aware.
Some people easily jump in saying their goals without knowing their emotional and financial situation. Knowing your financial capabilities will provide you a perspective on what goals should be focused and prioritized. Determining your net worth (assets minus liabilities) should be a good start. If you’re having difficulties determining your net worth, you may seek the internet or a registered financial consultant (much better who are professionals).
2. Implement SMART goal.
SMART goal is a guide in goal setting and increases your chances of achieving it. It stands for S-Specific, M-Measurable, A-Achievable, R-Realistic & T-Time-based. In Specific, it should describe clear action, behavior or result. Moving to Measurable, a goal should track your progress. In Achievable, it helps you to figure possible option. In Realistic, it finds what’s your available resources. Last, time-based shows your start and end date of your goal.
3. Record your goal.
Writing your financial goal helps us to remember and understand. A handwritten note in your desk will be grateful. Writing engages us more activity in brain from putting words to the paper. This will remind you to put your head in the game. Audio recording is also helpful because everyone has different method of recording information.
Once goal identified, reward yourself for completing this task. It may be corny but this will boost your morale. Identifying first our goal will lead us in tackling our objectives. In setting objectives, it is the core in planning because it expects us what to achieve in the process.
Final Words
Setting up unrealistic financial goals (also normal goals) leads to failure and it affects your time and emotions. And, we don’t want to reach that point. Setting up the right goal provides us clear picture and focus. Just like playing darts, you know what you’re aiming for. If you still haven’t found your financial goal, a discussion with your financial planner or financial consultant will guide your financial journey.
By the way dear reader, we’re planning to set up a Financial Journey Workshop soon. If you join up, you’ll learn the ins-and-outs of planning for your Financial Journey from goal setting to planning out your portfolio and even to passing on things to your loved ones.
If you’re interested, send us a message at our Facebook page (https://www.facebook.com/AlphaEdgeResearch/).
Disclaimer: Just a reminder, dear reader, that the content in this column is my opinion only and should not be construed as investment advice because I am not your financial adviser, neither did I take into consideration your personal objectives, financial situation, needs or circumstances as your fiduciary. This column is mainly for your entertainment and education only.
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