We all have our own personal financial goals, but few people know how to set financial goals which are truly achievable.
For starters, you need to know precisely what your current financial situation is. You need to know where you want to get to and you need to know what measures you can feasibly take to get there.
Simply saying "I want to have a million dollars", does not make it an achievable personal financial goal even though it involves money and your personal desires. It's not achievable until you know how you're going to do it.
To make dreams into actionable goals (and therefore achievable goals), consider the SMART format of goal-making.
For each lofty (yet realistic) financial dream you have, you need to go through the same steps:
- Calculate roughly how much you will need.
- Work out a realistic timeframe for getting it.
- Turn that amount into a monthly or weekly financial goal.
- Plan your steps for achieving that goal.
- DO IT!
"I want to have money for my retirement"
A commendable goal! So, work out what you will need. There are plenty of online retirement calculators which will let you enter in your current age, your expected retirement age and how much you want to have per week in your retirement. They use average life expectancies, work out all the interest payments you will earn on your savings for you and ultimately calculate an amount you need to put aside each week from now on.
The online calculator does all the hard work for you. Now you just have to work out how to either save or earn that much extra money per week. Your plan of action will need to be well thought out. The good news is it's probably not impossible and the sooner you start the better.
"I want to travel somewhere nice once a year"
Holidays cost money. Consider your last holiday and work out how much it cost you. Add a little extra to your total to cover things you forgot and any contingencies. Divide this amount by 52 to get your weekly figure (or divide by 12 for your monthly figure). Now you know exactly how much you need to save for your holiday. Your financial goal is set. Now plan your steps to save or earn that much extra and you'll be ready for your holiday when it comes.
So, now that you have the makings of your personal financial goals at hand, what will your goals be? How will you achieve them? Good luck!
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