Setting financial goals is the first step to a lot of things. It is one of the first things to consider when starting a business. It is one of the initial stages of personal finance management. It is the very foundation of many charity events.
Indeed, setting financial goals is very important. Not a lot of people know how to do it properly though. Here is a simple step-by-step guide on doing it the right way.
Step 1: Determine Your Goal.
Your financial goal could either be a set denomination or something like buying a car. Try to be as specific as you can. Simply saying that you want to be rich is not very helpful.
What does rich mean to you? How much money are we talking about here? A lot of people who make it their goal to become rich have the tendency to discard their goal whenever it suits them, which generally implies a lack of commitment on their part.
When determining your financial goal, its best to make it measurable as well. That way, youll be more motivated to achieve said goal.
Step 2: Be Realistic.
When setting financial goals, it is important that you remain realistic. Saying that you want to earn a million dollars in three weeks is short of impossible. Dont set yourself up for a goal that is too high because you run the risk of disappointment. And disappointment eventually leads to indifference.
Be reasonable when setting your goals. Remember that there are short-term goals (less than a year), medium-term goals (1-3 years) and long-term goals (5 years and up). Dont be embarrassed to start small.
A simple enough short-term goal is to set at least 10% of your salary every month for six months. Once you get past this goal successfully, youll have more confidence to take on bigger goals.
Step 3: Come Up With a Plan.
The last and probably most important part of setting financial goals is coming up with your action plan. Some financial goals dont need much of a plan, but most of them do.
For example, if your goal is to be able to buy a new laptop, you might need to cut back on some of your expenses. Youll need to sit down with yourself to determine which purchases can be sacrificed for the time being. You might also need to do a little bit of part-time work in order to meet your financial goal successfully.
Setting financial goals is very important. And with the right attitude and strategy, youll be able to meet your goals in no time.