It is best that you put your goals in writing as you put seeds into your own soil. Well here are some guide questions that will help you in defining your financial goals:
• What lifestyle level do you want? Do you want to just keep up your present lifestyle or do you want it to improve?
• How do you desire to improve your lifestyle? For example, if you need $20,000 a month to keep up with the lifestyle you have now, how much more do you need to enjoy the lifestyle that you really want?
• How much risks are you eager to undertake? As you grow older, you must take on lesser risks. The reason is that your chance of failure recovery reduces too. The amount of risks you can take will assist you in deciding whether you should be aggressive, conservative, reasonable and prudent, or flexible in your approach to investing.
• What financial comfort level do you want to undertake in the next three years, five years, and then ten years? Be sure to set your goal accordingly. For instance, you might decide to put into priority your children’s education. In the next three to five years, your primary goal should be to save enough money to finance their education.
• How can you augment your current income and by how much? Think about the sidelines and small businesses that you can get into so you can have additional active income while you are still in the start-up phase.
• How much can you afford to save monthly? Is it 5%, 10%, or even 20% of your present income?
• Which among your present expenses can you live without? Remember most of the expenses are optional.
After taking into consideration all of the questions mentioned above, you should be able to determine how much net worth you have which is total assets minus total liabilities that you should have at the end of each phase of your life. It would be advisable to adjust this target every three to five years.
Try to consult with educated professionals as you try to answer these questions. By now, you should be ready to set your financial goals. Setting financial goals is like dreaming your much awaited dreams. It is like imagining your wants and describing them to yourself in terms of what, when and how much.
But being a human endeavour, goal setting must follow specific success rules:
First rule: Write it. There was a university in the United States wherein a study was made and they surveyed graduating students on what their goals and plans were. Out of the survey, 97% did not write any plans at all. Only 3% had written plans. Twenty years later, they looked at the personal and financial net worth of the same people who were surveyed twenty years before and found out that the net worth of the 3% who had written goals were much greater than the 97% who had no written plans.
Second rule: State the plans positively. For example: I will save $5,000 every mid-month so I can buy a house in 15 years. This is much more effective than saying I will not spend too much on entertainment. If people look at the goals in a specific level, then people tend to achieve their goals more. Stating goals positively is an effective way to achieve something.
Third rule: For each of the goal, set a specific timetable. Goals without target achievement dates will stick as pure wants. They promote procrastination because commitment is not that firm.
Fourth rule: Progress should be monitored. Monitoring progress assures achievement, specifically when progress is being seen and felt. Positive developments always inject confidence and increase the person’s capacity to be able to make sure of the goal’s achievement. Bear in mind that winning is a habit and seeing constant progress will lead to developing positive habits that spell success.
In the end, do some soul-searching on what you really want as your financial goal. As you do this, write it down following what you have just learned. Then review your financial condition and your goal every month or at least every year.
Let us just hope that your financial goal may be attained by making use of these advices. What do you think?
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