Ask any personal finance expert and they will emphasize the transformative power of setting clear goals and putting them in writing. A study conducted by Harvard Business School revealed that when students were asked if they had set clear, written goals for their future and made plans to accomplish them, only 3% of them had done so. Surprisingly, 13% had goals but had not written them down, while the remaining 84% had no specific goals at all.
Fast forward 10 years, and the results were striking. The 13% who had goals were earning, on average, twice as much as the 84% without any defined goals. Even more impressive, the 3% who had clear, written goals were earning, on average, ten times as much as the other 97% combined. This evidence underscores the importance of having clear, measurable, and time-bound goals in steering one towards success.
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The initial step in achieving your financial and personal aspirations involves defining what you want to accomplish. A powerful approach to articulating your goals is by creating a personal financial plan. This structured schedule breaks down the specific areas you want to focus on and complete effectively.
Developing a personal financial plan offers the following benefits:
- Taking Control: It empowers you to take control of your financial situation.
- Focus: It helps you concentrate on essential areas and communicate your objectives clearly.
Seven Steps to Formulating Personal Financial Goals
- Focus Areas: Define specific areas crucial for achieving your financial goals.
- Where Are You Now? Evaluate your current financial standing.
- Destination: Summarize where you aim to be upon achieving your goals.
- Measurement: Specify how you will measure progress in each focus area.
- Activities and Resources: Identify the tools or resources you will utilize to achieve your goals.
- When? Be realistic about the timeframe for accomplishing your goals.
- Reward: Establish a reward system to anticipate upon reaching a target.
Below is an example of a simple plan.
| Focus area | Now? | Destination? | Measurement? | Activity | Resource | Timing | Reward |
| Eliminate my debt | Currently have a HELB loan, bank loan and 2 mobile loans. | Reduced to a desirable level or eliminated completely | Fewer loan repayments, if any | Use 20% of my monthly income to repay loans starting with higher-interest loans. | Budget | At the end of year 2025. | |
| Planning for my retirement | No pension arrangements besides NSSF | More financially prepared to retire | Systematic means of saving for retirement | Join and contribute regularly to a pension scheme | Zimele Guaranteed Personal Pension Plan | First contribution at the end of January | |
| Build up my emergency savings | Not enough money to cover an emergency | Save enough money to cover 6 months of expenses | Track the amount in the emergency savings account every month | Start a savings plan | Zimele Savings Plan | Before June of this year |
Conclusion
Setting goals is a pivotal activity in life, especially in personal finance. Use the provided template to set SMART (Specific, Measurable, Attainable, Realistic & Timebound) goals. However, remember that setting goals is just the beginning; the key lies in following through to conclusion.
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