The Importance of Financial Goals

We all have dreams. Things we want to do in life and things we want to be. Places we want to go and the things we want to have. Do you think that you will ever achieve your dreams? Do you wonder how you can ever realize your dreams? Many wonder and give up when they experiences roadblocks in the way.

It is often difficult to achieve financial dreams when so many financial issues seem to take priority. Other financial demands such as everyday expenses; paying off a mortgage or other debt; saving for your child’s education; saving for retirement; or taking a family vacation; or caring for aging parents. Multiple and competing demands on our finances make achieving our dreams seem impossible.

How can you manage all these financial challenges and at the same time keep your dreams alive? How can dreams become reality? You can reach your dreams by setting some financial goals.

Setting Financial Goals

Everything starts somewhere and goal setting in the foundation for goal and dream achievement. Financial goal setting is also the first step in designing a financial plan for you and your family. Financial goals can be short term or long term. With short term goals, accomplishment is expected or planned for in a short period of time, such a goal might be paying off a debt or the purchase of an appliance. Setting goals cannot be overemphasized. For some is in understanding yourself and then carefully setting some financial goals based on what you want to achieve.

When you set your financial goals use the S.M.A.R.T. test. S.M.A.R.T. goals are:

1. Specific – detailed and focused and specify the end result.

Example: I want to save $1,000 to start an emergency fund.

2. Measurable – quantifiable. There must be a method of comparison that indicates when the goal is reached.

Example: I want to save $100 a month until I reach $1,000.

3. Action Oriented – tells what is to be done to reach the goal. Action Verb tells the type of activity performed.

Example: save $100 per month.

4. Realistic – practical, achievable, and possible. Goals must motivate individual to improve and to reach attainable ends (that is not too easy or too hard).

Example: I plan to save $25 per week.

5. Time and Resource constrained – scheduled or regulated by time.

Example: save $100 next month without working overtime. (next month – time bound; without working overtime – resource constrained)

When your goals meet the S.M.A.R.T. test they will be better made goals and more attainable

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Write Down Your Goals

Did you know that only 5% of the population has clearly defined written goals? According to a study done on Harvard graduates, people who wrote down their goals are more successful at achieving them where those who did not write goals down were only moderately successful.

The value of writing down goals should not be underestimated. Your written financial goals can also help you to not overspend. Once you have your goals developed and written down take them with you in your wallet or hand bag. As you shop and spend money look and think about your goals and ask yourself if this purchase fits into my goals. You will spend less and save more.

Remember to be flexible when setting goals. If you encounter barriers, and you will, that seem like they may keep you from reaching your financial goals, do not give up. Like a change in travel plans, find another way or modify the goal to reach your financial destination. And let goals go if they no longer fit into your values, then you can put all of your energy into those financial goals that are important to you.

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