Friday, July 23, 2010
Financial Goal Setting
The 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.
Without smart 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.
FIVE 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.
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.
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.
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.
Step 3: If you have a lot of goals, focus on priority goals which are within your budget. Keep other goals in the list, move to the next goal only when the higher priority goal is achieved.
Step 4: Educate yourself and do your research. Read Money magazine and books about investing and wealth creation. Learn about the different types of investment options that suit your goal period. Yes, there is the potential for loss, but if you do your research and do a proper investment, 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 5: 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!
Setting goals 101