How much do you plan for your income? Some people ride the waves of life and have no specific goals. They work daily to get paid at the end of the month and pay their expenses. After paying the costs, what is left is spent at every opportunity, a routine repeated every month. Setting financial goals gives you peace of mind because you can plan your income and have a say if financial matters are discussed somewhere. This article explains financial goals and how you can organize your life by setting the right goals.
What is meant by financial goals?
Financial goals mean determining how much money you need to get by. Then, consider this amount as a goal and plan to achieve it. Financial goals may also relate to purchasing something in the future. For example, you can consider financing the necessary expenses for buying a house as your goal.
Knowing that this long-term mindset is scary for many people is fascinating. How should you set aside money for financial purposes besides paying expenses? According to statistics, 49% of people think planning is impossible due to the uncertainty of the future. In America, only 30% of families have long-term financial planning.
Why is planning for financial goals important?
In school and university, they teach almost nothing about finance and money management unless your major is related to economics and financial management. Setting financial goals will help you prioritize your spending and plan to build the life you want. The essential advantages of economic targeting are:
- creating a sense of financial security;
- increasing the feeling of satisfaction with life ;
- Reducing stress ;
- reducing unexpected costs;
- increasing financial freedom;
- increasing flexibility at work;
- Having a solution to deal with unexpected changes caused by the uncertainty of the future;
- They are helping to determine the budget to achieve various goals.
Types of financial goals
Let’s divide financial goals into three categories for easier planning:
- Short-term financial goals: These are more straightforward, and you can usually achieve them in 1 year or less. Buying a new TV, laptop, or mobile phone is a short-term financial goal.
- Medium-term financial goals: You can achieve five-year goals if you save or invest a portion of your income. For example, maybe buying a car is your medium-term financial goal.
- Long-term financial goals: achieving these goals takes more than five years. Buying a new home and retirement savings are two examples of long-term objectives.
To achieve mid-term and long-term goals, you must proceed step by step, and at each step, you must have indicators to evaluate your progress toward the intended goal.
The method of determining financial goals
Financial goals are supposed to get you to what you love and value. With the following steps, you can set the right goals and stay motivated and calculated to achieve them.
1. Specify what you want
Visualize the life you want and determine what you need to achieve it. Identify the costs of achieving each part of this ideal life. It’s best to write down the information you’re reviewing and read it while trying to reach your financial goals.
2. Break big goals into small goals
Break big goals down into smaller, more achievable goals. For example, if buying a 100-meter house is your long-term goal, you can make purchasing a 50-meter house your medium-term goal, and saving a few grams of gold a month is your short-term goal. Make sure that short-term and small goals align with the long-term goal and bring you closer to it step by step.
3. Prioritize
Prioritizing what your monthly salary will be spent on is very important in achieving your financial goals. If you don’t have any emergency savings yet, make it a priority to build one. Then, if you have debt, pay it off as soon as possible and then plan for your financial goals.
Sometimes, priorities change according to circumstances. For example, if you bought a new device this month, paying for it is more important than monthly savings.
4. Set financial goals
Many people think they have a financial goal, but when you talk to them about these goals, they talk about general issues. For example, they say: “My goal is financial freedom.” One person may reach financial freedom with 1 billion tons of capital, and another may need 10 billion tons to achieve this freedom!
When you quantify your goals, you can measure your progress toward them.
5. Make sure your goals are what you want
Some people set their financial goals by comparing themselves with others. For example, if their friend has a 200-meter house, they plan to buy a 250-meter house, while maybe a 100-meter house will meet their needs. Double-check your goals and ensure everything on the list is your desire and values.
6. Make a budget
You can divide your income between your current expenses and your financial goals. Ensure that achieving financial goals does not mean being stingy in current expenses; Maintain balance and allocate appropriate budget to each department.
How do you achieve financial goals?
Some people set financial goals but never reach them. Remember that it’s normal to sometimes get sidetracked by unexpected expenses, but stick to it and get back on track as soon as things get back to normal. In the following, we have presented five crucial points to remain on the path of achieving financial goals.
1. Give your goals exciting names
This is strangely motivating. For example, if your long-term goal is to buy a high-model car, instead of “buying a car,” write: “driving at a speed of 300 km/h”. Or, for example, instead of “debt payment,” report: “Get rid of the debt collector”!
2. Set a deadline
The SMART (Specific, Measurable, Attainable, Relevant, and Time-bound) goal-setting system is also used to set financial goals. If you don’t set a deadline for achieving your financial goals, you will keep putting things off and may never try to achieve your goal.
3. Visualize financial goals
Writing goals on paper is a good idea, but how often do you read your papers? We have a better offer. Create a vision board. Stick the photo of your different goals on it and place a column next to each goal. Then, color the bar regularly as you progress toward each goal. So, when the entire column is colored, you have reached your goal. This will motivate you to do what is necessary to finish painting the column sooner.
4. Don’t sacrifice everything to achieve your goals
Some people go to extremes on the way to achieving their financial goals. They cut out all the fun in their life on the pretext of saving money. These people sacrifice the present under the guise of a promising future, which has no result other than a lack of motivation and frustration. They may tire after a while, fall off the other side of the canvas, and overspend. Try to have fun and enjoyable plans, even if it’s something as small as hosting a friend.5. Use the automatic savings system
Mobile banks and innovative banking systems can transfer between accounts automatically. Set up a bank account for savings, then deposit a certain amount into the account every month using the automatic transfer feature. By doing this, the automatic savings amount will be deducted from your account, and you can easily ignore it. You will also avoid the temptation of spending your savings or depositing them in a particular account.
Financial goals are necessary but not sufficient.
If you spend your whole life chasing financial goals, you probably won’t get the satisfaction you want. You should set goals for all aspects of your life. Along with trying to achieve financial goals, think about self-improvement and personal growth, seek to learn new skills and progress in your career, connect with people you want to strive for, and plan to achieve the body you want. By setting goals in different aspects, all parts of your life will grow in parallel, and you will gain the satisfaction you want.
