Tag Archives: Financial goal

Feb 6 2012

Setting Top Priorities Using Financial Goals

 
English: Everything starts from needs or desir...

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Week one of my February Financial Resolution involved setting my top Financial Priorities and that to me means developing some Financial Goals.

Contrary to what may be one of my most treasured thoughts, a financial goal is not winning the lottery.  That is a financial dream.  A financial dream come true if you are the lucky 1:489,000,000.  A Financial Goal is something you’ve planned for. And it’s the planning – not sheer luck– that turns financial desires into financial reality.

As I stared at my piece of paper, I thought, what does a Financial Goal look like?

A financial goal lays out:

  • what you plan to accomplish
  • what resources you’ll need to make it happen
  • how much time you’ll need to make it happen
  • how you plan to make your goal fit into your overall budget and life

So hopefully, now that you have the key components, you are also ready to take this week to create your own financial goals.

Here’s How:

List your financial goals. Start by using the four steps above and write out what you want to accomplish. I created an example to share:

  1. What I want to accomplish: I want to take my grandchildren on a two-week national park vacation this summer. 
  2. The resources I will need are: Information on where we are going, money for hotels, meals, and gas, entrance fees for the national parks, souvenir money, emergency money, and perhaps additional resources I am not able to put in writing now, but should put some thought against as my plans develop. 
  3. How much Time I need to make it happen: I will need perhaps thirty hours to plan the trip, and I will need sixteen days to complete the vacation I have in mind. I am not sure the amount of lead time I need to save for the trip until I have a better idea of which parks I would like to visit.
  4. Plan into my overall budget and life: I will need my children and their spouses to agree to allow me to take the grandkids for two weeks; I will likely have to make some personal choices to save the amount needed to take the trip. I will have to save for the vacation, and perhaps make some sacrifices in my personal expenditures to have the financial resources for this trip.

Prioritize your Goals
Place goals that can be accomplished in under six months under “Short-Term Goals,” goals that can be accomplished in six months to a year under “Medium-Term Goals,” and goals that will take more than a year to accomplish under “Long-Term Goals.”

Estimate the cost.
How much money will it take to reach each goal? Create an estimate, and write down the resulting figure.

Set a target date.
When do you hope or need to meet your goals? Set a target date for each goal on your list, and use this as your deadline to meet or beat.

Determine how much you need to save.
Divide the estimated cost of your first goal by the number of weeks until your target date. This will show you how much money you need to save each week to meet your goal. Write down the resulting figure as an “Amount to Save Weekly”, and repeat for all of the other goals that you’ve listed.

Budget for your goals.
Rework your budget to include the money that you need to meet your goals. Then, put your plan into action, and watch those financial goals turn into financial reality!

Tips:

  1. Be realistic about how much time and money it will take to accomplish each goal – an estimate that is too low will only frustrate you.
  2. Keep your motivation by revisiting your list frequently to check on your progress.
  3. Setbacks will happen. If something throws you off of your target date, don’t give up – set a new date.
  4. Have more goals than you can work on at once? Then, determine which ones are most important to you, and make those your first priority.
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