It is one of the ways that you set yourself up for being financial stable thus success. We explain in this article how you can come up with practical goals when it comes to your finances.


1. Know where your money is going: Write down all of the financial goals you are trying to achieve in a lump sum — whether that saving for a home loan, paying off debt or building an emergency fund.

2. Determine source of financial distress: Before you do the anything first evaluate what situation really is everywhere, Find out your income – create a list where does it come from and how much each one bring in. Next check expenses that are tied to regular bills (utilities, car insurance) and balance them with irregular ones (food, clothes gifts).

3. Goals should be SMART (Specific, Measurable, Achievable, Relevant and Time-bound) An example could be like- I will save $10,000 for a house down payment within 12 months.

4. Create Goals Category under which your goals can fall short- Term (less than 1 year), mid-term (1–5 years) and long-term.

5. Needs over wants: Be realistic about what you require against that which one may desire. Pay your rent/mortgage/utilities/food first, and then realize what you have left for the fun stuff like entertainment.

6. Develop an action plan: Separate each of your goals into more easier steps to achieve. If you say that you plan to save $10,000, perhaps your action plan looks like setting aside money each month or reducing expenses.

7. Review your progress: Keep an eye on how you are doing vis-a-vis what you intended to do and keep making course corrections.

Example of financial goals:


Short-term goals:

  •  Save $1,000 into an emergency fund within 90 days.
  •  $2,000 credit card debt, 6 months.

Mid-term goals:

  • Own Payment on House Goal (in next 12 months) $10,000
  • Achieve a 10% increase in income within 2 years.


Long-term goals:

  •  $50,000 of annual pension income at age 65.
  • You want to save $50,000 towards a child's education 10 years in advance.

 

 

Question came in our mind that- “How to set financial goals.” Here are the basic steps you can follow to set financial goals and make a plan: How to Define Your Financial Goals in 7 Steps.

Step 1: Determine what matters most financially

  • What is Most Important to You (I e. saving for down payment; paying off debt or emergency fund)

 

  • Financial Values What are your financial values? ex: money, self-reliance and freedom


Step 2: Review your Financial Situation

Review your present condition in form of:

  •  Income
  •  Expenses
  •  Savings
  •  Investments
  •  Debts

Step 3: Determine your net worth

All of the assets you own minus all of the liabilities that are in your name.

Be SMART About Your Financial Goals: Make sure your goals are

  •  Specific (clearly defined)
  •  Measurable (quantifiable)
  •  Achievable (realistic)
  •  Relevant (it resonates with what you stand for)
  •  Time-bound

* Examples:
 

  • I chose to list: “I want to pay off my $2,000 credit card debt over the next six months”
  • $10,000 for a house deposit in the next 12 months.

 

 

Step 4: Categorize Your Goals
Immediate or Short term goals (1 year or less)

  • Building an emergency fund.
  • Paying down high interest, consumer debt.


Mid-term goals (1-5 years):

  • Down payment for a house.
  • Increasing income


Long-term goals (greater than 5 years)

  •  Retirement planning
  • Saving for A Child Growing Up.

Step 5: Create an Action Plan

  •  Break up each goal into actionable, smaller tasks
  •  Resources needed to reach each goal (i.e., time, money, skill)
  •  Develop a timeline for when each goal will be achieved.
     

Step 6: Track Your Progress

  •  Review how you are doing on reaching your goals at proper intervals.
  •  Revise your plan accordingly so you can get back on course.
  •  Reward yourself at every right step along the way.


 

Step 7: Review and Revise
 

Review your goals and progress regularly. Alter your goal if required.

 

# Update your goals regularly to accommodate shifts in income or priorities

These steps have to be followed in order that you simply will set effective financial goals so as for you to succeed with what your monetary dreams during a short period of time.

https://youtu.be/SzgwRuKvC0c?si=NWi2ROyHmYsmXZcM 

Additional tips:

Set your goals to run towards something and not away from something.
If you struggle to set and achieve your financial goals, consider hiring a fee-only Certified Financial Planner.


In Conclusion: Setting financial goals is not a one-time task. You should be reviewing and adapting your goals continuously in order to make a step towards economic stability, the same goes for success.