Almost any successful person, when asked how crucial it is to set financial goals, will answer that it is impossible to achieve success without this. If you do not have an aim and a plan of its implementation, you will only waste your time, miss opportunities, and always stay depending on the circumstances.
Setting financial goals is necessary for any person, regardless of the field of activity or income level, who wants to advance their life and career upward systematically. The maximum to which a person who does not set goals and does not follow them is doomed is to stop at the same financial, personal and career level.
Let’s find out how to set financial goals correctly, what they are and how they are achieved.
1. Rules for Setting a Goal
Defining the goal correctly is half the battle. You may have seen at least once in your life how a step-by-step case literally burns in your hands, leaving no chance for luck. The same happens with personal goals.
According to the Forextime blog, here are some crucial theses of goal setting:
- A goal is a measurable and specific result of actions. “I want to be rich” is weak and vague wording. “I want to make $500,000” is good.
- Stop confusing financial and material goals. For instance, “I want to make $500,000” is financial, and “I want to buy a XXX car” is material. For a material goal to become measurable, it must be equated to a financial goal through the equivalent, that is, “I want to buy a XXX car for $300,000.”
Usually, people set goals like “going on holiday to India with the family next summer” or “saving for an affluent old age.” But this definition is not specific. How much do you need: $50,000? Or maybe $150,000? Or even $2,500,000? If you do not know, then nobody knows.
A specific goal is good, but it is equally crucial to define a plan or schedule. They are necessary to determine the deadline for achieving the goal, with an orientation, towards which you can edit the stages to find a balance.
2. Achievement Period
Depending on the period of implementation, the goal may be:
- Short-term — up to 1 year;
- Medium-term — up to 5 years;
- Long-term — from 5 years.
The best time to set short-term goals is when the year begins. For most people, treating the calendar year as a reference period works best. Hence, in December-January, you have to think about your future achievements and write them down.
Medium-term goals usually are set for the next 2-4 years. As a rule, these are significant purchases related to real estate or transport, the accumulation of necessary funds for business, creating a financial pool, and saving money for forex trading using the MT 5 platform. In general, here you need to act in the same way:
- Determine what you want to achieve;
- Create a list;
- Calculate the equivalent;
- Define stages.
Usually, long-term goals coincide with medium-term ones but take more time to achieve. The impressive planning horizon poses some challenges as some situations can happen that affect achievement. At a minimum, calculations should be made, considering potential inflation. But even with poorly predictable factors, long-term goals are efficient if you keep your finger on the pulse of events.
3. How to Plan and Achieve
Many people know that a spreadsheet in Excel or a list in a day planner looks very convincing. But in practice, meeting financial goals is a tough obstacle course. Success consists not only of the correct definition of goals but also of behaviour and daily habits. Here are some tips to help you.
● Quality is more crucial
Forget multitasking. Tackling numerous goals at the same time is difficult. Most likely, it will be hard to keep everything under control. You will get tired and may not complete any of them. Pick a few top goals that you can focus on and work towards them. The rest will wait or lose their relevance.
● Find a balance of time and quantity
Logically, a large goal requires a significant investment of time and effort. It is better to have no more than a couple of global medium-term or long-term goals. Small financial goals, for which years of work are not needed, are normally fulfilled 2-3 at a time.
● Step-by-step achievement
Anyone who moves towards a specific goal acts more efficiently if they see progress. This motivates and convinces of the success of what is happening. Therefore, goals with any implementation deadline must be divided into stages, and after they have been completed, the task must be revised and new steps determined.
4. Financial Habits
Nothing influences a person’s monetary confidence and success like proper financial habits. Deposit $5,000 to your savings account in the bank if you decide to do so, no matter what happens. At the very least, try to do your best to follow this habit. Postponement with thoughts like “Now, there is not enough money, next time I will allocate twice as much” destroys all the progress. Show persistence and perseverance, act with an obvious effort. Soon it will become a real habit — easy and natural.
For some people, the actual implementation of the tips provided in this article is difficult. They believe that the financial aims are too significant, and the current situation simply precludes their implementation. Don’t be afraid. The sums and deadlines may sound impressive, but they are definitely within your power.