Financial goals are milestones set along the road toward financial freedom. You need to keep these in clear view so that you can get ahead of the route. Without these goals and a clear-cut plan to meet them, you might just end up drifting away from the highway, stop mid-track, or go back to where you started.
Goals, financial or not, can be short-term or long-term. It is easy to say, “I will be financially stable by age 30,” but how will you make that possible? There are a lot of things to consider and think about. Below are the key steps that you can take to be able to form a steady financial plan.
1. Prioritize your goals – Anyone can say that they have goals. What spells the difference is how they prioritize these over the distractions and luxuries that can be put off for later. You must write down your goals and choose which ones you can and should accomplish first. To do this, you need to distinguish the difference between needs and wants. Needs are shelter, food, clothing (the basic ones), and utilities, for instance. Wants are the things you desire to have but you can actually live without for a time, such as a new cellphone, a huge LED 3D TV, and so on.
2. Make sure that your goals are SMART – Vague goals will never be fulfilled. Your plan should be made of SMART goals: S for Specific, M for Measurable, A for Attainable, R for Relevant, and T for Time-bound. You cannot dream to be a millionaire and stop there. You need to specify how you will become one.
3. Develop an action plan – Once you have set SMART goals, it is now time to create the action plan. How will you achieve your goals? Will you work more hours a day? Skip the morning coffee from the expensive café? Start paying off debts gradually instead of buying a new shirt? Write down your plan once they enter your mind and polish them once you’re ready.