The Power of Financial Goals: Setting and Achieving Them

January 11th, 2020 - It's a new year, and a fresh start is often a great time to reflect on our lives and set intentions for the future. While many people focus on New Year’s resolutions for health and fitness, let’s not forget one crucial area: our finances. Having clear financial goals is the bedrock of sound financial planning and dramatically increases your chances of success. Simply drifting through life with no defined financial targets is a recipe for uncertainty and potentially missed opportunities.

Why Are Financial Goals So Important?

Think of financial goals as your North Star. They provide:

Direction: Without a goal, it’s easy to lose sight of where you're going with your money.
Motivation: Working towards a specific target (like a down payment on a house or a comfortable retirement) keeps you engaged and motivated.
Focus: Goals help you prioritize your spending and make smarter financial decisions.
Measurable Progress: You can track your progress and celebrate milestones, boosting your confidence.

Setting Your Financial Goals: A Step-by-Step Guide

Here’s how to set effective financial goals:

Start with the Big Picture: What are your long-term aspirations? Do you want to retire early? Buy a house? Send your children to college? Write down your broad, overarching goals.
SMART Goals: Make sure your goals are SMART:
- Specific: Instead of “save more money,” try “save $5,000 for a down payment.”
- Measurable: Quantify your goals with numbers.
- Achievable: Be realistic about what you can accomplish.
- Relevant: Align your goals with your values and priorities.
- Time-Bound: Set deadlines for achieving your goals (e.g., "Save $5,000 in 12 months").
Break Down Large Goals: Overwhelmed by a large goal like retirement? Break it down into smaller, more manageable steps. For example:
- Year 1: Save 10% of your income.
- Year 3: Increase savings to 15%.
- Year 5: Assess investment strategy and make adjustments.
Prioritize Your Goals: You might have multiple goals – prioritize them based on their importance and urgency.
Regularly Review & Adjust: Life changes. Your circumstances will change. Regularly review your goals (at least quarterly) and adjust them as needed.

Resources to Help You Get Started:

Budgeting Apps: Mint, YNAB (You Need a Budget), EveryDollar
Financial Planning Websites: NerdWallet, Investopedia, Bankrate

Conclusion:

Setting and achieving financial goals is a fundamental step towards financial security and peace of mind. Don’t wait until you’re feeling overwhelmed – start today! Take control of your finances and build a brighter future, one SMART goal at a time.