Financial well-being January 25, 2016 By
“A goal is a dream with a deadline.” – Napoleon Hill
Every person’s life is a journey from one place to another with many twists and turns in between. And everybody has an idea of what they want the journey to look like. Financial goals play a big part in helping us achieve the results we desire. With just a few simple steps, you can create a “map” that will turn those wonderful dreams into reality.
Think. This is the most important step in setting your goals. To know where you are going, you have to decide what is important to you. Do you want to own a house? Do you want to pay for your child’s education? Do you want to be prepared for retirement? Take a few minutes to reflect on what goals will help you along your journey, and discard the ones that are just detours.
Categorize. Sort your goals into long-term (over 5 years), mid-term (1–5 years), and short-term (less than one year).
- Long-term: These are your big goals, the “ultimate dream.” They are larger projects that usually require more money to accomplish. It is best to keep one or two of these, but don’t overwhelm yourself with more than that. Good examples of this are early retirement or college tuition for a child.
- Mid-term: Mid-term goals can’t be executed overnight, but don’t take years to accomplish. These are slightly more detailed and help in the progress of your long-term goals. It is best to have 5–10 mid-term goals. Examples include purchasing a car or owning a rental property as an additional source of income.
- Short-term: These goals are smaller and easier to achieve in a short period of time. They are the building blocks to reaching your mid- and long-term goals. You should have more of this type of goal than any other. Once you are successful at reaching a some of these, it makes the bigger goals seem much more realistic. Be specific. Short-term goals include cutting household spending by $100 a month, establishing a rainy day fund, or paying off the $3,000 balance on your credit card in the next six months.
Write. Record all goals in a journal, and keep it in a place that is easy to access. Make notes about techniques that are working well and ones that seem to be more difficult. This will help keep you motivated and provide a good reference for you over time.
Evaluate. Every once in a while, measure your progress so you know if adjustments are needed for future goals. As time passes, you may find your priorities have changed. Be honest with yourself, and make sure all your financial goals stay relevant to your priorities.
Life is an adventure, and finances are one of the many tools we use to get us to the right destination. Using these steps, you can create a map of goals to guide you along the way.