Many, if not all of the things we want to do in life require financial goal planning so that we can save money and use it to achieve our goals. When you're young, you'd naturally want to travel, explore the world or buy some nice clothes, a new laptop or a new DSLR. The list goes on.
Once we get older, we start thinking about more serious stuff, like retirement or different health conditions that might require a large monetary investment on our behalf.
And so, in order to have enough money saved, we need to make a plan ahead of time and keep up with it. If you need some guidance in this direction, then you're in the right place.
In this article, we're going to tell you everything you need to know about the basics of financial goal planning.
- Analyze your spending
Take a look at your credit card statements and identify what your top splurges were over the last year. Which ones do you regret the most?
Figuring out where you made a mistake is going to help you make better decisions in the future.
- Outline a personal budget
If you can't outline a personal budget for a month, that's fine. You can take it step by step and outline the budget for a single day or even a week. You can also write down what you'd be spending your money on because then you will be able to figure out if too much money is spent on things you don't need.
- Define your goals
Before you start walking down this path, it's essential you define your financial goals. Your goals should be S.M.A.R.T., meaning:
- Specific: "Spend less money on takeout food each month" is not a specific goal. "Spend 50% less money on takeout food" is.
- Measurable: "I will eat at least two home-cooked meals per day".
- Achievable: "I will cook dinner at home during weekdays" is probably more achievable than "I will cook dinner all week long", since you'll most likely go out during the weekend.
- Realistic: "I will go online and search for recipes that are easy and quick to make".
- Time-efficient: "I will start eating at home more often starting next week".
- Categorize your goals
Your goals can fit in three different categories: Short-term, medium-term and long-term. For example, you can achieve a short-term goal in one to three years, while long-term goals are achievable in more than eight years.
This matters because, during this time, you can make certain investments or open a savings account that is going to help you achieve a certain goal faster.
- Set milestones and monitor your progress
It's recommended to do this at the end of each month, so that you can get a clear view of whether you notice any progress or not.
At the end of the month, when you will actually see that all your efforts were not in vain, you will feel really good about yourself. And every month, things will get better and better, until you will reach your goals.
Write down and read the financial goals that you will make this year out loud. If you do that, you will have the guarantee that your goals are indeed realistic because they will have a different impact when you'll actually hear them. They will actually sound realistic.
If you're having issues with your financial goal planning, then feel free to reach out to one of our financial advisors.