How to set financial goals
Lechedzani Pitso | Monday June 30, 2014 06:59
“Do you have financial dreams or financial goals?”
While dreams and goals may sound like the same thing; they’re not. A financial dream is something you hope for; a financial goal is something you’ve planned for. It’s the planning, not the hoping, that turns financial desires into financial reality.
Let’s take a look at what a financial goal looks like?A financial goal must allow for: what you plan to accomplish; what resources you’ll need to make it happen; how much time you’ll need to make it happen; how you plan to make your goal fit into your overall budget and life;
In order to create your financial goals, you have to make a conscious commitment of your time and then put it into practise.
Are you ready to create your own financial goals?Write down your goals as we follow these simple steps together:
List your financial goalsYour list of goals must be written somewhere where you won’t lose them, somewhere safe that you can refer back to them regularly.
Now list all your goals, you can always come back and write some more as you think of them. You must then decide how long you are going to allow yourself to achieve each goal. Goals that can be accomplished in under six months place under “Short-Term Goals”. Goals that can be accomplished in six months to a year under “Medium-Term Goals”. Goals that will take more than a year to accomplish under “Long-Term Goals”.
Estimate the costHow much money will it take to reach each goal? Estimate the cost and write that figure in the next column which you can label “Estimated cost”.
Set a target dateWhen do you hope or need to meet your goals? Set a target date for each goal on your list; write this date in the third column. Now you can use this as your deadline for this goal, and do your best to meet or beat that deadline.
Determine how much you need to save in your budgetIn the fourth column, you need to calculate the amount you need to be saving each month in order to achieve your goal. You will need to take the estimated cost of your first goal, and divide it by the number of months you have allowed yourself to achieve it.
For example, if the cost of the goal is P600 and you have allowed yourself six months to achieve it, then you will write P100 to be budgeted for each month in column 4:”Amount to save monthly”. You will then need to save P100 each month to meet your goal. Repeat for all of your other goals that you’ve listed.
Budget for your goalsOnce you have completed your financial goals table, you will need to revisit your budget and plan the savings you have worked out, enabling you to reach your goals. You many need to go without some other things in your budget, you will need to ask yourself if these sacrifices are worth the goals you want to achieve in your life? Put your plan into action, and watch those financial goals turn into financial reality!
Tips:Be realistic about how much time and money it will take to accomplish each goal – an estimate that is too low will only frustrate you.Keep motivated by revisiting your list frequently to check on your progress. Accept that setbacks will happen. If something throws you off of your target date, don’t give up – just set a new date.
If you have more goals than you can work on at once, simply determine which ones are the most important to you, and make those your first priority. Remember, setting goals is a life time work, it takes time and effort, and patience.
- Author: Lechedzani Pitso – Financial Wellness Trainer with S.C.I. Training (Pty) Ltd. © S.C.I. Training run financial wellness programmes in Botswana. For help and information contact them on 72309719 or training@wellness.com
- Names in this article have been changed.