Most people who fail don’t fail because they don’t try, it is usually because they don’t have the right system to create success.
Success is intentional and so it is no surprise to learn financial security doesn’t happen by accident; it requires planning and intentionality. Whether you aim to pay down debt, save for a house, or ensure a comfortable retirement, setting clear financial goals is the first step in taking control of your future. Here’s a list of items to consider when developing your financial goals.
Make A List
Developing and sticking to a financial goal plan is not an easy task, but it begins with a single step: identifying and writing down your financial objectives. If you already have established goals, it is essential to review them at least once a year to assess whether you are on track, ahead of, or behind your target. For those who have not set goals, create a list without worrying about the number of objectives at this stage. Goals can be as straightforward as saving for a vacation, as complex as paying down debt, or as long-term as saving for retirement.
Narrow Your Objectives
Once you have pinpointed your goals, categorize them into ‘needs’ versus ‘wants.’ The primary difference is that ‘needs’ are crucial for your daily living and survival, whereas ‘wants’ pertain more to your desires and are not essential. To divide your list, question yourself, “Is this necessary for my survival?” If the answer is yes, it falls under ‘needs’; otherwise, it is a ‘want.’ Additionally, it’s vital to prioritize goals that will enhance your financial security, with a focus on the ‘needs’ category. For example, when deciding between paying off debt and booking a vacation, the choice should be clear, as one is based on necessity and the other on desire.
Choose Wisely
Once you have narrowed down your objectives, the next step is to prioritize the list, with a focus on distinguishing between short-term and long-term goals. You may be surprised to find that there are competing goals, and the best way to address this is to determine which one will cause the greatest harm if deferred. For instance, delaying the repayment of high-interest credit cards in favor of other goals may ultimately prove to be a costly decision.
Just Do It!
Once you have prioritized your list, the next steps involve adding a timeline and budget to achieving each goal. It is crucial to be realistic about the time to achieve your goals, as having more time generally increases your chances of success. Your age is a significant factor in determining how to invest, with younger people typically having more time to build their nest egg and being able to take greater risks due to their longer investment horizon. To estimate how much money you need towards your goal or to save for retirement, you can use the numerous online calculators available to guide you in estimating the cost and amount to save.
A financial advisor can assist you in crafting a detailed financial plan by evaluating your present finances, establishing clear objectives, and suggesting actionable steps to reach those goals.