How to Set Real Financial Goals

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By Wasatch
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Article Rating: (9 Ratings)

In the tough economic times financial goals are more important than ever. It is also a good time to evaluate any current plans we have to see how the current recession or whatever they chose to call it affects our direction.

Difficulty: Challenging

Instructions

Step 1

Before you begin I would recommend you involve your spouse or any person who is deeply involved with you in making you in any plans. Money should be discussed and goals set together. Unless you are both working together with the same goals it is hard to prioritize spending and change habits to get ahead. Take stock of where you are. This will involve writing down all debt with what payments and interest rates. You need to know where you are. Write down any assets you have like 401K plans, life insurance, home equity, antiques, cars that are paid for etc... Get a financial snapshot of where you are today.
Step 2

Write down goals

Now begin with long term goals. Do you want to be making a certain amount per year? Do you need investments with a given return to retire at your current income level? Are you simply needing goals to pay off credit card debt or a home mortgage. Write down your long term goals and financial dreams.
Step 3

Measure your money

Now take stock of where you are and where you need to be financially. What kind of time frame do you want to attach to your goals? Set short term measurable goals that will get you from point A (today) to point B (the goal). My current short term goal is to have my car completely paid off by July. I am close to paying it off. The interest rate is low, but when I have it paid off it will free up $178.00 a month to pay on my other bills or invest. I bought it on a 5 year loan and plan to pay it off ahead of schedule. Set small goals and make continual progress towards them. Keep measuring progress. If small rewards motivate you put them in place and write them down.
Step 4

Be realistic on long term goals and the steps to get there. There is nothing wrong with stretching yourself and aiming high. You should. Goals should not be easy things that happen anyway. Push yourself to make progress. Keep track of everything. If your goal is $52,000 annual salary then you need to make $1,000 a week. That is about $200.00 per working day or $25.00 per hour assuming 8 hour work days 5 days a week. Easy to track. Then realize that $4.00 per day extra earnings or money saved instead of spent will equal one week by the end of the year. If you can add $4.00 a day to your cash flow you will have a one week paid holiday. By the same token if you wastefully spend $4.00 per day you are making a decision that you will work one week a year for that $4.00 a day habit. Small steps equal big financial results over time.
Step 5

Evaluate where you are from time to time. If you are not making the progress you want or need to reevaluate your goals don't be afraid to shift gears. All forward progress requires us to change and grow from where we are now.