How to set financial goals

Setting goals for the new year is a thing around this time. Besides that I think it’s a nice hype, I also think it’s important to set goals and pursue them. Because sometimes you may feel that you are not making progress in your debts or financial situation. You feel like you are lagging behind. Maybe the budget you’re using isn’t working out the way you hoped.

What are financial goals?

A financial goal is a plan you have for your money. For example, a monthly budget is your financial goal for the month, while investing for your retirement is a long-term financial goal. The reason for goals is that they keep you focused and accountable.

Examples of financial goals

Here are some examples of financial goals

  • Pay off debts.
  • Build a buffer for unforeseen expenses.
  • Saving for a holiday, pension, school costs for children.
  • Start a business or follow a course.

Why setting a financial goal is important

Ever wonder why setting these goals is so important?

Well, the fact is that dreams and desires, to be fulfilled, most of the time, depending on some financial investment.

It doesn’t matter if your goal is big, like buying your own home, trading in your car for a newer model, or taking an amazing trip abroad. even with a more modest goal, the fact is that a certain degree of financial planning and financial goal setting will be required.

Think with us, if you have a dream, and you need money to make that dream come true, however, you don’t take any practical action to get the necessary amount of money to finally make that dream come true, it will be very difficult to make it come true, Is not it?

That’s why creating organized and clear financial goals is important because they are what will pave the way for the realization of your dreams.

Keep in mind that often the distance between your dreams and their realization may not be the lack of money. But rather the absence of adequate financial planning and the lack of discipline to follow this planning and achieve your goals.

How to set financial goals

1. Write them down

When you put things on paper it has your attention. You see the goals, so you are also consciously working on them, as long as the goals remain in your head. You can choose to write down the goals on a post-it note and stick it on the fridge, mirror, etc. This will keep you focused.

2. Make your goals specific

Don’t just write: I want to manage money better. That’s too vague. This is best written as follows: This year I will keep track of my daily expenses in a cash book because I want to save.

3. Make your goals measurable

How much do you want to save exactly? Breaking your goals into smaller goals will keep you motivated, as you can cross each smaller goal off the list.

4. Give yourself a deadline

If you don’t link time to your goals, you won’t reach your goal soon. You can always adjust the planned time if you see that you need a little longer.

5. Make it your own goals

You can get inspired, but stay true to yourself. What would you like?

Reach your financial goals more easily with an accurate financial roadmap

Know that there are no right or wrong answers when it comes to setting your goals. And no one investment style is better than another, from the most conservative to the most aggressive. The important thing is to set a course and stay the course.

From there, achieving your goals is paramount, and your vision serves as the direction for evaluating each of your investment decisions. From time to time, ask yourself if, by taking such an action, you are achieving or moving away from your goal.

A roadmap can also be useful in times of market uncertainty, when it is tempting to make rash decisions. A clear vision, including specific guidelines, will guide you towards your final goal.

Tips for achieving your financial goals

Now that you’ve learned all about financial goals, here are some tips to help you reach your goals:

  1. Define your financial goals in the short, medium and long term;
  2. Create a detailed monthly budget and track your expenses regularly;
  3. Set aside a fixed percentage of your monthly income to invest;
  4. Reduce unnecessary expenses such as impulsive purchases;
  5. Invest in financial education and learn about investments;
  6. Diversify your investment portfolio, according to your investor profile ;
  7. Stay true to your financial goal even when things get a little tough. In time, you will surely get there!
  8. But focusing only on planning is not enough, it’s time to take action.

Many people still think of savings as their first option for investing, but there are several options on the market that are much more profitable and even safer, such as Fixed Income and Treasury Direct products .

Understand what short, medium and long term goals are

It’s very important that you know how to set your financial goals and we’ve also made clear the advantages of doing this for your life.

Conquering dreams and fulfilling goals is the personal achievement of many people, and money is important. Especially when these goals and dreams are big. So you need to know how to plan.

To define your goals and life goals strategically, and to know the best way to invest your money to reach each one of them, it is important to understand the concepts of short, medium and long term , and it is about them that we are going to talk about now.

For the short term:

Thinking about the short term, your priority should be paying off your extra debts, especially those with higher interest rates, such as credit cards and overdraft.

Next, you should think about what your most urgent and immediate needs are, such as a small renovation of something that needs attention in your home, for example.

Then it is possible to move on to bigger goals, and the realization of dreams that require some kind of bigger investment.

Medium term goals:

Regarding the medium term, it is time to set relatively larger goals and objectives, which will require greater financial investment to be achieved.

The medium-term objectives to be considered include any goods or services that can be achieved within a maximum period of 12 months.

When the focus is on the long term:

Long-term goals are those desires that are considered greater, which require a longer period of time and greater planning to be achieved.

In this category are the objectives and goals that will need the joint collaboration of the family members, and will need more than 1 year to be achieved, and to achieve goals like these, greater and more detailed planning is necessary.

A tip is to put on paper how long you would like to achieve each of these goals, and how much money you will need to invest monthly to achieve them.

A family trip abroad, changing a car, or even buying a new house or apartment are examples of long-term goals.

Conclusion

When you don’t have a plan for your money, it becomes difficult to get anything positive out of it. That is why it is important to start setting financial goals.

It’s never too late to have one. Pick a pen and a book today and have a clean working plan on how you finance for the rest of the year should go, we wish you success on your new journey. 

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Richard Okoroafor

Richard Okoroafor

Richard is a brilliant legal content writer who doubles as a finance lawyer. He brings his wealth of legal knowledge in corporate commercial transactions to bear, offering the best value that exceeds expectations.

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