Financial security begins with setting short-term, mid-term, and long-term financial goals. When you don’t have a specific goal, you’re more likely to overspend. You’ll then be unable to cover unexpected expenses, not to mention retirement. Developing a credit card addiction and not having enough cash to get proper insurance can leave you vulnerable to some of life’s major risks, making you more vulnerable than you need to be.
As the world learned during the pandemic and many families learn every month, even the most prudent person cannot prepare for every crisis. When you think ahead, you have a chance to plan for things that might happen and do your best to prepare for them. Taking advantage of wealth management allows you to adapt your life and goals to the inevitable changes with time.
1. Make a note of everything
When you note down your goals, something special happens. It increases your chances of actually achieving them. Don’t hesitate to commit to yourself by writing it down. Put them on your car, desk, or bathroom mirror. It will help you stay focused.
The only thing you’re saying is, “I’d like to be better with money.” That’s too vague. In other words, you want to say, “I plan to pay off $15,000 of my debt this year.”
3. Measure their effectiveness
You need to pay about $290 a week (or $1,250 a month) to reach your goal of paying off $15k of debt in a year. You will remain motivated to accomplish your goals when you cross each micro goal off your list.
4. Establish a deadline
If your goals aren’t time-sensitive, will you ever reach them? It says someday is not one of the seven days of the week. Give yourself a finish line, and then adjust it if necessary.
5. Your goals should be yours
When you see what other people are doing, it’s easy to think you should do the same. Comparing yourself to other people is a tricky game you will never win. Be sure the financial goals you set are the right ones for you. It’s unnecessary to take out a second mortgage for your renovated kitchen just because your friends are doing it. Put your blinders on, stay in your lane, and cross your finish line.
How to Reach Your Financial Goals?
Making a plan that prioritizes your goals is the best way to reach your financial goals. Examining your own goals, you will find that some have a broad scope, while others are more narrowly focused. Here are three categories of goals:
- A short-term financial goal takes less than a year to achieve. Take a vacation, buy a new refrigerator, or pay off a specific debt.
- Achieving mid-term financial goals won’t happen overnight but shouldn’t take too long. Paying off your credit card debts, purchasing a car, or finishing a degree are some examples.
- To accomplish long-term financial goals (more than five years), you may have to commit long-term and typically spend more. Examples are saving for a college education, a comfortable retirement, or buying or paying off a home.
Goal setting involves determining what you want to achieve, estimating how much money is required, and the time it will take you to reach each goal.