Setting Financial Goals....
We all know that setting goals in life is important, but so many people ignore that fact and skip goal setting completely. It’s not that people want to fail or accomplish less, it’s that setting goals requires thought and intention which can be difficult and take time. The truth is that people who set specific, measurable goals are more likely going to reach success. Just like it’s good to have goals in other areas of your life, it’s also beneficial to set clear financial goals.
Write it all out
When setting financial goals, first choose exactly what you want to accomplish. Jot it all down on a piece of notebook paper or on an excel spreadsheet. Write down the goals that you think you could reach this month, this year, or even in 10+ years. No goal should be left unturned. Don’t hold back from writing it down, even if you feel like you won’t be able to achieve it. Something happens when you physically write out a goal. It becomes more realistic and feels less like a dream and more like an opportunity. Once you have dumped all your thoughts out on a piece of paper, it’s time to focus on how to write a clear and specific goal.
Clear and Specific
Good goals are clear and specific in terms of what you want to achieve and when you want to achieve it. Start by stating a time period of when you want to complete your goal. For instance, instead of saying “I want to be debt free.” You could say “I want to be debt free by December 2019.” Another example is instead of saying “I want to have £12,000 in savings” you could say “I want to have £12,000 in savings by December 31st.” You need a deadline that you have set with intention. Specific goals that are time-bound provide you with the opportunity to calculate how much money you need to save or pay towards debt between now and your goal date. Once you know how to write clear and specific goals, you are ready to set short term, long term, and far long term goals.
Short term goals
Short term goals refer to goals that you would want to accomplish within the next few months. They won’t take too long to reach, but they should still be written down so that you don’t skim over them. Your short term goals could include savings goals, debt payoff goals, or even personal goals. You could have a goal to work a certain number of overtime hours or to even acquire a second job. A good short term goal would be “I want to pay off my three credit card balances by 1st December.” This goal is specific and has a deadline.
Short term goals are easy to calculate into steps. For instance, if I want to save £3,000 for a holiday in 4 months, I can simply divide £3,000 by 4 to get £750. I now know I need to save £750 each month to reach my goal. Don’t skip the important step of calculating out your short term goals!
Long term goals
Long term financial goals are goals that you want to accomplish within the next 5-10 years. For instance, when my friend and her husband started their journey to becoming debt free, they had a goal to pay off all their debt (except their house) within 5 years. They knew that yes, their income level might change and that they would also increase their childcare costs when they had a second baby. They knew that becoming debt free within that time period would not be easy and that they would have to sacrifice, but they were able to determine that it indeed was possible. Thankfully, they beat that deadline by 5 months! What do you want to accomplish financially within these next years? Do you want to save for a down payment on a home or pay off your home altogether? If so, write it out! Try to be as specific as possible and don’t forget to give yourself a deadline! It’s totally okay if life happens and you have to push that deadline back some, but having a deadline makes your goal specific!
Far long term goals
Far long term goals refer to goals in the next 10+ years. As a young professional in my 20's, I have an idea of how much I want to have saved for my retirement within the next 25-30 years. ( if you are not sure, use the HMRC website to help you calculate). Far long term goals are more difficult to calculate for but can be done. If you’re ready to start writing out and keeping track of your financial goals, then check out my previous post on organising your finance with a budget binder.
Work together
If you are married then you should sit down with your spouse or partner to work on your financial goals. When two people are working towards the same goal, they can help hold each other accountable when one person gets off track. If your goal involves becoming debt free and you just can’t seem to get your spouse on board, then it is helpful to always check on each other along the way.
Don’t have a spouse? Then find an accountability partner! Your accountability partner can be a friend, sibling, or even a parent. Ask that person to check in on you and your goals. Share your progress, successes, and failures with them! You’re more likely to keep going if you have someone with you along the way!
Types of Financial Goals
Financial goals come in many different types and sizes! Don’t neglect some of the following financial goals that you could be setting:
Holiday funds – Planning a trip to America in 2 years!
Education funds –. If you are planning on doing further study...
Retirement – Who wants to work forever?
House purchases/down payments – The more you have saved, the less you have to borrow! and don't forget the gov help to save funds ( ask at your bank)
Charities – Because giving back is the best.
Cars – My goal is to pay cash for my car
Holiday gifts – Sometimes the best gifts are budget ones... Lol
Celebrate
Don’t forget to celebrate your progress along the way! Sometimes reaching a goal is a celebration enough, but other times you need to celebrate when you accomplish something you have been working on for years! So let yourself relax, give yourself credit, and celebrate how awesome you are when you are able to check a goal off your list!
If you want to truly achieve your goals, you’ll have to learn to write them down!
