Setting financial goals may mean the difference between financial freedom and struggling to do the things that you want to do. It may mean the difference between financial success and stress and worry about your next pay check. This makes financial goal setting important for you and your family...so you need to get it right.
In my years of advising clients about goal setting I have found that having a blueprint greatly increases your chances of goal setting success.
This goal blueprint can be distilled into 6 steps:
Whatever your goal is, setting and achieving goals should be based on values that are important to you. What does financial success look like to you?
Do you want to:
If you couldn't fail what would your vision of financial success look like? How do you want to be remembered in this area of your life?
These are important questions that you must ask in brainstorming your ideas for finance or money goals. These goal setting activities could help you in this brainstorming.
You have practiced 'no limit' thinking which means that you have dreamed big and not placed any limits on your goals. You have laid the foundation for your goal setting success.
Now it is important to build on that vision and use goal setting. Without writing your goals down, they remain a wish list. Writing your goals on paper makes them concrete - it brings your wish list from the abstract into the real world.
Download this financial goal setting worksheet (PDF file).
Step 1: Identify one value/intention and write a long-term finance goal that reflects this value/intention.
Step 2: Try to make these SMART goals. Setting specific goals with a deadline focuses the mind as well as your savings strategy.
For example, say you have the goal
Robert Kiyosaki, author of Rich Dad Poor Dad, described three types of income.
On your financial template you downloaded earlier identify possible actions that you can take to support your long-term finance goals.
To increase your earned income, ask yourself:
The problem with earned income is that it often depends on the number of hours you work - when you stop work then your income dries up.
When you stop work, are you planning to have enough portfolio and passive income to keep you in comfortable retirement?
One way to develop your passive income is to think of ways that you can make your hobby or skills into an online business.
A tried and tested way of creating wealth is through investing a regular sum of money over a long period of time. By investing an amount each month into well-chosen assets allows you to be well on the way to developing substantial savings.
Developing your portfolio income in this way makes use of compound interest and minimizes the risk of market movements affecting your investment.
Your finance goals drive the strategy that then drives the returns and risks you need to take.
Your answers to these questions form the basis for setting your short-term financial goals - the building blocks to long-term success.
You know what you want to achieve and have written your goals in clear, measurable terms. Before setting short-term goals, try to get a realistic view of your current wealth.
Knowing where you are at helps you to identify strategies to put in place a budget but also identifies ways that you can attain your goals.
Budgeting will determine:
To achieve financial success it is important to break your long-term goals into more manageable short-term goals. Your long-term goals are your final destination but between now and then there are many actions that are needed to support your long-term financial goals.
Each step towards your long-term goals is an action completed. These goal setting templates may be beneficial to brainstorm your short-term financial goals.
A financial plan to achieve your goals is actually a goal setting plan. A goal setting plan is a set of steps that you need to take to achieve your goals.
By writing down your action plan you often highlight extra knowledge you may need in the area or of the obstacles that get in the way of achieving your goals.
Download this goal setting template setting and achieving goals (PDF file).
Reviewing your financial progress is achieved when you write down your goal setting plan and have clear goal setting strategies to achieve goal setting success
Protecting your wealth and your family, now and in the future, is normally done through various life insurance and income protection products. How much protection is required should always be talked over with your qualified financial planner
Enjoy it. There is not much point in creating wealth if you can’t enjoy it. Reward yourself for achieving goals. As the proverb goes “All work and no play makes Jack a dull boy.”