Goals cover many areas of our lives. We have goals for our overall life, we have goals for the new year. We set goals for education, careers, we even set goals for our children. Goals are great because they allow you to better organize your time and resources towards fulfilling something. Setting financial goals is something that often goes overlooked so today I’d like to take about setting financial goals.
Setting Financial Goals
Many of the books I’ve read about personal development, project management and time management promote writing things down. Getting things done promotes the concept of getting it out of your head and onto paper in a system. Goals should not be any different from this, everyone should be written down and expanded upon. When you write down a goal you are more apt to keep it at the fore front of your mind. For myself I have a page in my planner which has all my goals written down on it, every morning I open to that page and read over my goals asking myself is there any steps I can take towards completing this today. In terms of financial goals it is hard to take actions towards them each day, many of us only get paid weekly, semi monthly or monthly. The important part is to write things down first, then elaborate on them.
Elaborating Financial Goals
Elaboration is key towards succeeding at the goals you set for yourself. Generalizing a goal such as Save $10,000 dollars is a noble goal but it does not answer how you will accomplish it. At years end you may only have a few thousand saved because your savings habits were sporadic, or chaotic. The solution is to write your goal down, then write how you plan to achieve that goal. I plan on saving $5,000 this year by saving $250.00 from each pay check the day I get paid. On your payday when you start your day and review your goal sheet you will ask yourself “Can I take any actions towards any of my goals?” and the answer will of course be yes.
Prioritizing Financial Goals
There are many in their twenty’s who have not yet married and do not have children, their goals are a lot easier to prioritize and define than those of us that do. When you do have children however, what goal do you think should come first; Saving for your own retirement or saving for your child’s education. According to many of the answers I’ve read on CNN Money and other personal finance website the correct answer is your own. The best elaboration I ever saw came from one of the “experts” at CNN who said “There are loans for college, there are however, no loans for retirement.”
Laying Out Goals
Many people in their twenty’s have just come out of school and no doubt have some type of debt from student loans, or all those pizza’s ordered on that credit card you thought would be a good idea during sophomore year. Many will also have other things on their minds such as moving out of your parents house and making it on your own. You will no doubt want a new vehicle in order to get to work and cruise around on the weekends. From our perspectives our lives are just starting out, so retirement isn’t even on the radar. So you will want to set those goals into categories such as:
Short term goals are generally things such as , save for a new television, save for Christmas, save for girlfriends birthday present. Your emergency fund falls between short term and midterm goals. The reason it falls in between is due to the fact that you want to get a temporary emergency fund established as soon as possible, but it will most likely take you a while before you get it full funded. These goals are usually obtainable within a few months to a year because they are relatively low cost.
Mid term goals on the other hand count for things such as saving for a new car, landscaping the yard, even purchasing a house. These goals can usually be reached in anywhere from a year to 5 years. They often come together when there is more time to save for them.
Long term goals are mainly things that take 5 years and beyond. This can be anything from saving for a vacation home all the way up to retirement. I see far too many twenty somethings neglecting retirement because it seems so far away and they convince themselves it can wait. Long term goals are especially important because you can get the power of compounding interest on your side while saving for them. Additionally you will have to save less every month when you plan ahead.
Goals
Make sure you write your goals down and know what they are. Everyone has different priorities and time lines due to their own circumstances or desires. My article is simply a guide, from my personal perspective and experience with setting goals.
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