5 steps to set financial goals
Setting financial goals may seem like a daunting task, but if an individual has the will and clarity of thought, it is quite easy. Try these steps:
1. Be clear about the objectives
Any objective (not to mention financing) without a clear objective is nothing more than a dream. This could not be healthier for financial matters.
It is often said that savings are only deferred consumption. So, if you are saving today, you must be absolutely clear about the purpose. It can be anything like early childhood education, retirement, marriage, dream vacations and luxury cars.
Once the objective is clear, place a monetary value for that objective and time frame. The important point in this step of setting goals is to list all the goals, no matter how small, expect in the future and give them value.
2. Keep it realistic
It’s good to be an optimistic person, but being a lover is not desirable. Similarly, while it may be good to keep your financial goals a bit aggressive, going off the line will definitely affect your chances of achieving them.
It is important to keep your goals realistic in nature, as they will help you keep on track and keep you excited throughout the journey.
3. Calculate inflation
Ronald Reagan once said: “Inflation is as violent as the aggressor, terrifying like an armed and deadly thief like a professional killer.” This quote summarizes the best that inflation can achieve in achieving its fiscal goals.
Therefore, keep in mind inflation every time you set a monetary value for a distant financial target in the future.
For example, if one of your financial goals is your child’s college education, which falls within 15 years, inflation will increase the monetary burden by more than 50% if inflation is only 3%. So always keep inflation in mind.
4. Short versus long term
Just as each calorie is not the same, the approach to achieving each financial goal will not be the same. It is important to branch out short and long-term goals.
As a general rule, any financial goal that expires in the next three years should be called a short-term goal. Long-term goals should be classified as long-term goals. This fork with short-term versus long-term targets will help choose the right investment tool to achieve.
More on this later when we talk about how to achieve financial goals.
5. To each his own
The journey of setting financial goals is an individual issue, that is, your goals are your own and determined by your desire to achieve them. Often we get training to set goals just to realize later that it wasn’t for us.
It is important that your goals are actually your goals and not inspired by someone else. Take a look at this step for all the goals you’ve set after this step, and you’ll be on track to achieve them.
At this time, you will be ready to achieve your financial goals. It is time to do everything possible and achieve those goals.