Consider working through these five steps to set your financial goals.
1) List and prioritize your financial goals.
This should always be the first step while you are in the process of prioritizing the goals, mention the reason in front of each goal, as to why you want to achieve this goal. What is the motivation behind this goal? Is it intrinsic i.e. coming from within you or Extrinsic i.e. coming from your surroundings? Is this something that you really want or something which you feel you should have because your friends, family expects you to have?
2) Take care of the financial basics.
Today’s financial world is highly complex when compared with that of a generation ago. Forty years ago, a simple understanding of how to maintain a checking and savings account at local banks and savings institutions may have been sufficient for financial transactions.
Now, consumers, must be able to differentiate between a wide range of financial products and services, and providers of those products and services.
Previous, the less-indebted generation may not have needed a comprehensive understanding of such aspects of credit as—the impact of compound interest, and the implications of mismanaging credit accounts, etc. There is a need to increase consumer awareness about the necessity of financial literacy and how they can access it. Financial literacy is not just for investors.
It is just as important, if not more so, for the average family trying to balance its budget and save for their children’s education and the parents’ retirement. The need for financial literacy of consumers at various stages in their lives, and how financial literacy programs can be designed to best address these needs have to be understood more.
Financial literacy involves imparting knowledge about the risk and return of financial products to the users and providers of these products. It is this knowledge that helps in containing risks and maintaining stability in the financial system. Financial basics explains about Bank accounts, Online and Mobile Banking, Debit Cards, Credit Cards, Cheque, PAN Card, ATM Awareness, Loans, Investments and Insurance and Taxes.
3) Connect each financial goal to a deeper motivation.
Just as with fitness or career goals, tying your financial goals to specific motivations makes them more meaningful. As you review your goals, reflect on the purpose behind each one.
What is the underlying motivation for it? Who is the goal going to benefit? For example, a goal of might be tied to a larger desire to feel more secure about your family’s future.
“When documenting the detail behind the goal, get into the specifics,” says Darr. “Understanding the ‘why’ helps you become more committed and understand how the goal is associated with other goals.”
4) Make a financial plan to reach your financial goals.
Although you can have a wide variety of goals, you can broadly classify each of these goals within a specific time frame so that your priorities become clear. Categorizing as per time frame helps you visualize the goals and pace yourself accordingly. To ensure your life is planned and on track, you must focus on putting clear timelines when setting goals. This will make you more productive and effective. There are 3 types of Goals
1) Short-Term Goals
A short-term goal is a goal that you want to complete in the near future, such as within the next week or the next month. These are often stepping stones towards larger goals, though not always. You can also use short-term goals to take action on smaller projects or ideas.
2) Medium-Term Goals
Medium-term goals are goals you plan to achieve within five to 10 years. Regardless of your profession and background, setting medium-term goals can help you plan your future success and stay motivated.
3) Long-Term Goals
Long-term goals are objectives you want to achieve months or years down the road. Setting this type of goal gives your work purpose, helps you make better decisions, and offers a hefty dose of daily motivation. In this article we explain how you can use long-term goals to accomplish big things over time, with examples.
5) Revisit your financial goals regularly.
Looking at what you set out to achieve at the beginning of the year, your goals – be it saving for a trip or purchasing a car – may have been greatly impacted by the effects of the pandemic and recession on the economy. Now’s the time to reassess your financial plans and security.
Regularly Check Your Credit Score
Your credit score is an important financial tool that determines your ability to borrow money and at what interest rates.
This makes it important to maintain a healthy credit score despite changes in the economy. Get your credit score from a trusted credit reporting agency or visit Shoprite, Checkers or a Checkers Hyper Money Market Counter with your ID, proof or residence to pull your Kudough Credit Report. You will be charged a small fee.
Conclusion
Financial goals are the specific objectives that individuals or businesses set for themselves to achieve financial success. They represent the desired financial state or outcome and provide a sense of direction and focus towards achieving that state. Financial goals can be short-term or long-term, and they can vary depending on the individual’s or business’s financial circumstances, priorities, and aspirations.
Examples of financial goals may include saving for a down payment on a home, paying off debt, building an emergency fund, saving for retirement, or investing in the stock market to build long-term wealth.