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3 Ways to Set Up Financial Goals

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Have you wanted to travel overseas or buy a home but found that you didn’t have the finances to do so? This is probably because you didn’t really plan and set financial goals.

Goals help us to not get distracted by daily pressures and to focus on the larger picture. Setting and achieving them isn’t always the easiest thing, so here are some tips to help you do so.

Know what goals you’re making Would you like to go on vacation? Maybe go back to varsity in 3 years? Whatever they are, the first steps you should take in goal setting is deciding what goals you intend to reach and how long you expect them to take. This will help you decide which of the three categories they fall into and, which are short, medium and long term goals.

Short term goals are normally achieved under a year, for example vacations, paying off debt or buying a new oven. Medium term ones can’t be too short or take too many years, such as buying a car or finishing your degree. Long term ones are over 5 years so they require commitment and sometimes more money, which can include saving for your child’s university fund or buying a house.

Make them are realistic as possible Setting your goals is like a balancing act. If you set ones that are too easy you’ll never achieve them, but if they’re too aggressive you can get discouraged. So don’t make it difficult for yourself by setting them outside the realm of reality. For example, if you are living between pay checks you won’t be able to get debt free within a year.

To do this you need to not only be realistic but also flexible, so that if something happens you need to be able to adjust your expenses to meet them. For example, you need to make a goal that will help you get debt free within a span of five years.

Write them down Having a roadmap to your goals will give you an idea of what you want and will increase your chances of achieving it. But if you don’t have them written down somewhere, then you will not be able to successfully follow through with them. So start by choosing which goals are priorities so that you can work towards achieving them first.

Write them down, but remember they need to be achievable (e.g. based on your income), measurable (e.g. pay off your child’s tuition) and specific (e.g. accomplished at retirement) on paper to become real in life. You can find this out by asking yourself when you think you’ll be able to achieve them.

Give yourself a reward Goals such as saving for retirement, buying a home and studying are more far off than short term goals, therefore making it difficult to achieve. This is why it’s important to break them down into shorter milestones or timeframes, so that you can keep motivated by giving yourself rewards for reaching each milestone.

So you find a reward that personally interests you, for example, once you’ve paid off your biggest debt you can reward yourself with a vacation to Tahiti, but you get a visit to the spa for paying off R5000 of it.

Making goals especially achievable ones doesn’t need to be a difficult. So why not use these tips to help you get you that house, degree or vacation that you’ve always wanted.

Dana Da Silva

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