Personal financial goals, or rather their presence, is one of the main criteria for human success. People without them, swimming along the course of life, are akin to animals: food, work, evening TV, and sleep. And so in a circle. After 5, 10-15 years, all the same. And if anything happens in their life, then most likely — this is just a favorable combination of circumstances.
Setting financial goals allows you to achieve the plan at a faster pace with minimal costs. Without them, a person does not develop and remains at almost the same level, including monetary. Using the services of short term loans, you can easily achieve them. But each financial goal requires a clear implementation plan and effort.
What Is a Financial Goal Needed for?
A financial goal is, most often, a certain amount of money that we must have to achieve some tangible or intangible good. Why then is it called “financial”? Because it is not always just the amount of money, sometimes it is also the amount of income that we strive for, and this is not money; this is finance.
“A good financial plan is a road map that shows us exactly how the choices we make today will affect our future.”
— Alexa Von Tobel
Virtually any objective, material or non-material, becomes financial:
- update the car — you need to accumulate a certain amount of money or provide a certain monthly income (if we do this on credit).
- relax at sea — again, you need to ensure the availability of a certain amount of money in the account.
- to become the best in the professional industry — and here most likely material inputs on the passing of training, acquisitions of literature will be necessary.
Short-term financial goals (for the next year or six months) are needed to control spending in real-time and get rid of unnecessary costs. In short-term planning, you will be helped by budgeting and the so-called emergency fund, into which you will set aside a certain amount of money every month in case of unforeseen expenses.
Attention! 10 consecutive years of debt repayment is a top financial priority for Canadians. It was the highest priority for 21% of respondents, followed by accounts (18%), growth in investment or wealth (13%), vacation savings (8%), and retirement savings (8%). Only 32% of Canadians said they were confident in their financial situation.
How to Set a Financial Goal Correctly
Is it possible to set a goal incorrectly? Yes! Especially at the beginning, by inexperience. And this is very dangerous from the point of view that an incorrectly set goal is usually more difficult to achieve or not achievable at all. And this has a very negative effect on motivation.
The so-called SMART system should form the goal:
- Specific. This means that the most accurate description is indicated — “accumulate in a settlement account” or “transfer to a bank account,” or “have in your wallet.” The goal of “I want to be a millionaire” cannot be achieved because this is not clear what it means.
- Measurable. It is simpler here; all financial goals are measured in monetary units. It is necessary to indicate the exact amount — “accumulate $50 000 in a bank account.”
- Achievable. This is one of the difficult and one of the most important points. It is very important to assess financial capabilities. If you overestimate them, then it may be unattainable for you; accordingly, you can stop believing in yourself without achieving a result.
- Relevant. The goal set should allow you to achieve the desired result. The result must be meaningful to motivate its achievement.
- Time. Use specific dates and deadlines. “Someday” will not play here.
“You must gain control over your money, or the lack of it will forever control you.”
— Dave Ramsey
Top 7 Short-Term Financial Goals for the Year
The financial purposes help to see the person’s level of income and show commensurability of the existing income level and desires of the person. Often made plans of desires help people punch the financial ceiling and increase norm level.
What can be your financial goals for the year? Here are some examples:
- Start recording expenses and revenues. To effectively manage finances, you need to clearly understand what amounts and where to go and come in your budget. Now there are a lot of convenient applications for the phone and programs for the computer that will automatically calculate the percentage of income/expense. The advice to everyone is to reduce costs to the optimal level. Often, with regular budget management, it is possible to track items of inefficient and harmful spending.
- Get rid of debts. The availability of debt obligations will not allow you to achieve the set financial goals since you will constantly be busy finding funds to make another payment on the loan. It is better to direct all efforts to pay off the debt and then go on to plan for the next purchases and investments. Only loans for large purchases in the form of mortgages for housing are allowed since not many have enough money to buy an apartment immediately.
- Form an airbag. Modern reality proves to us that every one of us should have an airbag. The crisis that arose in 2020 due to COVID-19 was vivid evidence that this is a mandatory “lifeline.” Unforeseen circumstances can take you by surprise at any time. You need to have the means not to be their victim. The recommended minimum is 6 months of family income, but three will be enough to stay afloat until the situation stabilizes.
- Raise your income. This goal is relevant every year absolutely for any purposeful person. There is always room to grow, and it is recommended to increase income at least once a quarter. At first, it may be a part-time job, but it is still important to increase competencies that will increase the cost of your services or goods in the future.
- Defer at least 10% monthly. The most important habit of all rich people is to regularly set aside a certain amount for the long term. To postpone, revenues must exceed expenses.
- Start investing. Experts believe that investment in the stock market helps your money grow faster than when you just put it off. The word “investment” can be frightening, but there is nothing wrong with this if you remember that high incomes are associated with high risk. If you can afford to take risks, take risks. If you like to act for sure — choose the shares that reflect the market.
- Go on vacation. Choose a holiday you have long dreamed of. Full relaxation will allow you to feel more confident and will give you the energy to set more global goals. Do not neglect your current desires, and be sure to do so whenever possible.
It is very important to competently allocate resources and understand what peaks you are striving for. Special attention should be paid to the idea that the compiled list of goals is just an approximate route of movement but not the main condition for a happy life. And most importantly, to fully enjoy the results of achieving each goal set.