Financial goals are things that you want to attain which require money you don’t currently possess. These goals can be short-term (less than 1 year) or long-term (greater than 1 year). Typical goals: buy a house, save for college, or retire comfortably.

Steps to reach Financial Goals

It’s going to take time, effort and discipline. There is no short way around it.

1. Prioritize Your Goals
“ An unwritten goal is only a wish” – proverb
Write your goals down on paper (or computer)! I prefer to write them on paper because the feel of writing them makes them real to me. And then choose which one you want to accomplish first. Prioritize!

How?
Needs versus Wants: The first step in prioritizing your goals is to objectively decide if something is a need or a want. A need is a necessity. Basic needs sustain life, such as food, water, shelter, heat and clothing. A want is something you desire but is not necessary for sustaining life (no, the Ipod does not fit under need, sorry but it is a want). Some wants may be practical in supporting your lifestyle, such as a computer or cell phone. Others may be a luxury, such as a vacation home or motorcycle. How much is enough? Is more always better? These are questions you will have to answer for yourself based on your values.

2. Make your goals SMART
SPECIFIC: State each detail of your goal. For example, “I want to buy a 4 bedroom ranch house, in a safe neighborhood, within 5 years”.

MEASUREABLE: How will you know if you’re making progress? State the criteria or amount needed to reach your goal. For example, “The price of the house I want is $350, 000.”

ATTAINABLE: How will you know what to do first? Break the goal down into smaller steps that need to be completed. For example, “I will need $35, 000 for a down payment.” “I will attain this by having $xxx automatically deducted from my paycheck and deposited into an interest-bearing savings account for xx months.”

RELEVANT: Does your goal fit your values? State why the goal is a good one for you. For example, “I want to own a house because I will enjoy making it my own and I want something that will build equity over time.”

TIMED: How will you decide when to act? Set a deadline for each step towards your goal. For example, “Today, at my lunch break, I will go to my credit union to fill out the forms to have money deducted from my paycheck and deposited into a savings account each month.”

3. Create and Action Plan

After you have made your goal SMART, make an ordered list out of the smaller steps that need to be completed. Assign deadlines for each step and put them onto a calendar that you normally look at each day. An essential tool to help you track your progress and make adjustments as time goes on, is a spending plan or budget.

4. Get Organized

In order to reach your goal, you will need to track your financial matters. There are many systems you could use, but here are two you may find helpful.

Paper records. A common way of storing and organizing your financial documents is to keep them in a filing drawer or box with several labeled hanging files or folders. Many people will label the folders according to their budget categories. Typical budget categories are: Income, Charitable donations, Savings (emergency, investments, retirement, Housing (mortgage payments, taxes, insurance, repairs), Transportation (car payments, taxes, insurance, repairs), Utilities, Medical, Loans, Credit Lines, Estate, and Obligations (child support, alimony).

Some people attach stick-on flogs to the documents they will need to find at tax time. Some people store these documents in a separate folder.

A non-financial file to keep is: Personal documents (social security cards, passports, birth certificates, etc). Naturally, these papers should be kept in a fireproof location or electronic copies should be made and kept in a secure place.

Electronic Records: One way to lighten the paper load and streamline some record keeping is to use a personal computer. Quicken Online (now free to use) or Mint are good programs to use.

5. Communicate Your Goals

Communicating regularly about your goals, helps you maintain your focus. Schedule a regular weekly time to discuss financial updates with you spouse and children. Involve the whole family in creating and maintaining a household budget. If you family isn’t aware of your financial goals, they can’t offer support.

6. Be Money Smart
The fact that you’re reading this shows that you are taking responsibility for attaining the knowledge and skills required to manage your financial matters. There are many good financial education resources available for free, like www.knowdebt.org/education. Improving your financial literacy will always pay great rewards.

Keep it Real

Financial goals are only one aspect of what most people want out of life. Almost always, financial goals are a means to a greater end, such as the happiness that comes from sharing experiences with family and friends. You may also have causes, beliefs, or values that are extremely important to you. They may be so important that you choose to dedicate a significant amount of time and energy t them. Only you can define what brings you happiness. Occasionally, you will encounter some obstacles in reaching your financial goals. Therefore, anticipate having to make adjustments to find a way around them, and don’t lose sight of the
things you value most in life.

And you’re right, I am by no means a great artist! 🙂

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