Being financially secure is something we all strive for; however, getting to that point is difficult. During an uncertain economy, you need to have financial resources available when times get tough. You likely understand the importance of having an emergency fund, retirement account and personal savings, but do you have a financial goal with each financial account?
Knowing your financial goals is important. It gives you something to focus on, a target to reach and financial confidence when economic uncertainty arises. Without financial goals, you might find it difficult to plan for the future.
To begin thinking about your financial goals, ask yourself this simple question: What are you planning to do with your money? Once you have identified your long-term money needs, you can begin the planning process to reach your financial goals. We have created a basic outline on how you can reach your financial goals.
Make A List of Financial Goals
Start by brainstorming every possible monetary need you can think of (e.g. retirement, car, mortgage, college, etc.). Don’t worry about listing them in any particular order. Just write them all down. You will have a chance to prioritize your financial needs in the next few steps.
Your list likely includes generalized monetary needs, so it’s time to be a bit more specific with each of those. It’s too easy to state, “I want to retire.” Anyone that has ever worked wants to retire at some point. Being vague will not help you that much, so be specific. For a retirement goal you should identify how much you will need to save for retirement (e.g. $2 Million) and the age you would like to retire at (e.g. 65). You could even include the date you wish to retire.
Dissect Your Goals
You want to make sure your goals are manageable, so start thinking about short, medium and long-term goals. If you plan to save money for a new car, focus on a monthly goal, six month goal and yearly goal. You would ideally want to meet each monthly goal to best reach your long-term goal, but sometimes things come up. You might only be able to save 50% of your monthly goal this month, so knowing your long-term goal can help you adjust your future monthly goals to account for the missed savings.
Outline Your Plan of Action
How do you plan on saving your money? This will require you to prioritize your wants versus your needs. Think about what you will need to eliminate from your daily life to be able to reach your financial goal. Make a list of actions/steps that will help you reach your goal. For example, you might direct deposit a certain amount of funds into your savings account and eliminate your daily Starbucks coffee purchase to help you save more. Try to come up with three or more actions/steps you can implement to reach your financial goal.
If you have a financial advisor, ask them questions about how best to implement your goals. Talk with your bank to learn more about any new savings or investment account opportunities. Read articles and research online. Being informed is critical to your success, so utilize all available resources.
Are you still on track to meet the monetary goals and the deadlines you set? Each month, evaluate how you are coming along. It might be necessary to adjust your timeline due to changes in the economy or other life factors. Perhaps you received a job promotion, can you add to your monthly savings to reach your goal faster? It’s important to monitor your progress so you remain on track to reach your financial goals.
As you can see, with some simple planning you can reach any and all of your financial goals.
For those that have financial goals, what are some of the ways you approached reaching your goals? Share your tips and strategies with our readers below.