How to set financial goals in 4 steps – expert experience
They say that in order to set financial goals correctly, you need to act step by step. But is it so in practice? Read in this article the experience of setting financial goals from self-organized and successful people.
The content of the article:
- time and timing,
1 Get ready
To achieve a goal, it is not enough to dream about it or really want it. A foundation is needed. If you set a financial goal, start by keeping track of your spending, and don’t forget to record how much money you receive and where it comes from. When you understand which of the items of expenditure “eats" the budget the most, it will be easier to refuse it or cut it.
“I record my “debit-credit” in a notebook. I make a notebook myself, and highlight expenses and incomes in different colors. But not everything is strict. For example, in the “income” column, I also have a section where I record gifts and pleasant surprises. I turn to the notebook for an analysis of the financial situation no earlier than two months later, so that a clear picture appears.
For ease of perception of the financial picture, I divide everything into categories:
To achieve financial goals, I ask myself why I need more money and where I will spend it. Planning is less painful when you have a list in front of you.”
What is the best place to start
Planning your finances should start with small, realistic goals. For example, instead of planning a trip abroad that you can’t afford to start with, make sure that your income exceeds your expenses.
2 How much and when
The law of planning financial goals – clear statements. You must clearly understand how much money you need to accumulate and how long it will take you to achieve your goal.
“The abstract formulas “I want a lot of money” and the like never work. Man always wants more. This desire is independent of income. In addition, the very concept of how much money a rich person should have also changes markedly with the standard of living. But in order for the standard of living to improve, you need to understand how much and for what you need money. And how long can you afford it. For example, “Accumulate 200,000 🪙 in a year (that is, in 12 months)”.
Formulate specific goals, clearly outline your financial plans.
“If your goal is to become a millionaire, then know that this is a bad goal. Of course, in this case, you indicated a specific amount, but did not think what to do with it. Why would you want to become a millionaire? Do you want to invest this money, spend it? What to spend and where to invest? Would you like to receive the whole amount at once, or in installments?
This goal is not effective also because it raises many questions and does not contain specific answers. Most likely, with such a setting, you will not achieve a financial goal.”
3 Stay Realistic
Even when you dream. Realizable dreams raise self-esteem and promote personal growth. If you get 50,000 🪙 per month, and your spending reaches 40,000 per month, in six months you will not save a million.
Of course, you can try to win Lady Luck’s favor. But do you personally know at least one person who borrowed money, went to the casino, bet them all and won? Gambling belongs to the category of expensive and risky financial hobbies, it can also include playing on the stock exchanges and investing all available funds in such an unstable enterprise as cryptocurrency.
To understand how to make money, you will first have to learn how to count them. Find out how much you spend and on what, and cut the most useless item of expenditure. Start laying the foundation for your financial base.
“It is not easy to get up every morning and go to work, get an education at the same time and save money. It’s even harder to do all this when your goal is a castle in Italy. But with proper planning, you will find a way to make your dream come true. Why not? To achieve a big goal, break it down into several small blocks. When you alternately achieve one or the other, you will not only be able to get closer to your big dream, but also see how you are moving towards it.”
It is also important to understand whether you are planning financial goals that you want or whether these are false desires imposed from outside. Let’s say you love to travel, but you’re saving up for a car because "the family needs it." But you are not a fan of driving and are generally afraid of this process.
Study the issue of false and real desires in order to learn how to set your own personal goals. It’s also important to remember that the "here and now" is no longer a human instinct to survive the fight-or-flight nexus. But this outdated reflex is well used by marketers, offering and imposing false financial goals on your ancient instinct. Remember, real financial goals not only improve your life now, but also have a positive impact on it in the long run.
4 Determine what is more important
Everything at once. Usually this wish is characteristic of people who have never achieved anything themselves and are used to the fact that someone else performs active actions for them. But this is not an example of competent delegation and management. This is an example of a poorly performing financial goal.
It’s like target audience. If your customer is “everyone”, it means that no one will buy from you. People differ, at least in their social status and financial income.
We want to say that if you have plans to buy real estate, a family minivan, as well as a trip to the sea, and all this is on the same line of priorities, nothing will work out for you. So learn to prioritize. What is more important – a car or an apartment? Or maybe you haven’t taken a vacation for so long that the most important thing for you is to forget about your work for a week and not turn on your phone? Make savings for specific purposes. And in order. Otherwise, you simply won’t achieve any of them.
Do not set more than 4-5 short-term goals. Otherwise, you run the risk of spraying yourself and not really doing any of them.