Attaining Financial Freedom Part 4 – Setting Financial Goals

People don’t just stumble on financial freedom; they plan and work their ways towards it. One of the preliminary things to do to attain financial freedom is to set financial goals. You must set goals of what you want to achieve.

A financial goal should include a written plan of what you want to achieve, how and when you want to achieve it. It basically states how you expect to make and spend your money over a period. This could include getting a new job, paying off debt, saving for a new house or saving for retirement.

Financial goals could be short-term, achievable withing a few months, or long-term, in which case, it takes years to achieve. Financial goals must be SMART.

Specific: To set a goal, you must have a specific thing that you want to achieve. A goal like “I want to increase my income” is vague but a better goal is “ I want to increase my income from $50,000 to $100,000 in five years.”

Measurable: A good financial goal must be measurable. This will make it possible to track the goal.

Achievable: Your goals must not be based on circumstances beyond your control.  You must set a realistic goal that you are able to achieve with discipline.

Relevant: Don’t set goals just because your friend has the same goal. Your goal must be unique to you, giving your financial standing.

Time bound: A good goal must have a time limit.

Of what use is a goal that is not followed with necessary action plans. So, you must take necessary actions that will help you achieve your goals. For example, if you plan to buy a new car in the next one year, you need to start saving money towards the goal. Determine how much you want to spend on a car and how much you need to set aside every month to have enough money to buy the car. If you are not disciplined enough to follow the necessary actions plans to achieve your goals, you may want to have someone who will keep you accountable. In addition, you must periodically review your goals and adjust appropriately. So, don’t just set a goal and sleep on it.

Sometimes, goals are conflicting or there are just not enough resources to accomplish them all. In this case, you must prioritize. Look at all your goals and determine which ones are more important, which ones are more urgent, which ones are more realistic and which ones improve your wellbeing more. Then, arrange your goals in order of importance. Allocate resources and plan to accomplish them in that order.

In conclusion, don’t just wish, set financial goals and plan to accomplish them! Budgeting, savings, and investment are generally some good ways of setting financial goals.