Author: Financial Awakening Blog
If you still haven’t read Step 2 – Set a goal and make a plan to achieve your goal #2, I highly recommend you to read it first.
Setting Financial Goals
Today in part 3 of Step 2 – Set a goal and make a plan to achieve your goal, we will focus in talking about setting financial goals.
Financial planning is a topic many people will try to avoid. It is not because it is hard to do, but instead, it is because many people cannot face the reality and assess themselves.
Ignoring the problem does not make it goes away. Face it and deal with it
It is a fact that many people in North America has a spending problem. We just have to admit it before we can face it and find a solution. It is just like Rob Ford said
Toronto doesn’t have a revenue problem, but a spending problem.
We don’t have a revenue problem, but a spending problem. Most of us have a decent income, but we cannot control how we spend our money. If you want to understand more about this concept, please read Step 1 – Plan ahead. Imagine where you are when you retire for more information.
Here is your step by step guide to set your financial goals:
1. Write down your financial goals with pen and paper
At this stage, you don’t need to think too much about how difficult is it to achieve these goals. You just need to brainstorm and put down whatever you want to achieve. It can be retiring at the age of 50 and travel around the world; it can also be a small goal such as making $100k. List everything with a piece of paper and keeps it in a folder. Don’t lose it. This is your starting point.
2. Put down some more details for each financial goal.
Now you need to think about how much it take to achieve each goal. For example, it you put down a goal of making enough money to buy a new fully loaded Honda Civic, then you will research and see how much it costs to purchase that particular car. Be specific and don’t guess.
3. Think about how long it take to achieve your goals.
Group together those goals according to how long it takes to achieve into 3 groups. Short term (1-2 years), medium term (2-5 years), long term (5+ years). You do not necessary put all the goals with the smallest amount of money into short term. If there is something you want to do, and you want to do it now and see the result, and you are positive that this is something you can achieve, then go for it. There is nothing wrong to set aggressive goals, but make sure you really think that it can be achieved in the given time frame. Unrealistic goals do not help you much. Keep in mind that you cannot get rich by saving. You should also set milestones within achieving the goal so that you can measure the progress.
4. Constantly review your progressive in achieving your goal
Once in a month, you should review your goals and milestones, and check out the progress. If it gets to a point that you believe the goal cannot be achieved in time, then adjust the goal and time frame accordingly. If you set your goal probably and work really hard to achieve it, then you should have little to adjust. There are also times that you won’t know how difficult your goal is to achieve until you started doing it.
5. Celebrate when you achieved your goal
Of course you should celebrate when you finally achieved your goal. However, you should also celebrate every time when you achieved a milestone. This give you energy to go on and finish the next milestone. When the target is too far away, you will feel hopeless and give up. Instead of working towards the goal, work towards the milestones. You will feel the difference.
If you plan to do something, do it now!
Now or never.
This is what I tell myself all the time. If we do not start, you will never start. So if you really want to do this, do it now!
You will find it much easier once you started.
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