“More important than the how we achieve financial freedom, is the why. Find your reasons why you want to be free and wealthy.” –Robert Kiyosaki
TABLE OF CONTENT
- Financial goals
- Money goals
- Retirement goals
- Smart financial goals
- Financial goals examples
- Effective financial goal
- Why financial goal setting is very important
- How to set your financial goal
- Achieve Your Financial Goal
- Best financial goal
- Short-term financial goals
- Mid-term financial goals
- Long-term financial goals
- Financial plan and budget
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| from Pixabey |
Do you feel that despite working tirelessly, your financial development is not up to par? Are you not able to get close to the financial success you’ve been thinking about? Even if the source of income or the amount of income does not increase but the expenses are increasing and you are unable to handle the burden.
Almost all of us are well aware of the importance of money in our lives. Especially in today’s era when money is the only way of transaction, financial success is very important. Most people’s thoughts are now about money, how to earn more, how to save for the future after spending all daily or monthly expenses, how to enjoy better life especially luxurious life, etc., etc. And those who are going through financial struggles are seeking for new ways of earning. So much jumping, so much running after money, yet most people do not set financial goals. Many people directly say “we will see when the money comes”. Hey, understand this, if you don’t find a way of earning, if you don’t make the way easy, then where will the money come from? And it is necessary to set financial goals to establish the path of money.
What are financial goals:
Financial goals are the creation of advanced targets for earning, spending, saving, and investing. This is the goal you must set for how you earn and manage your money. Financial goals should be set in three terms, long-term, mid-term, and short-term.
Short-term financial goals:
Short-term financial goals consist of managing daily budget, reducing debt, cutting down unnecessary expenses, and starting an emergency fund. In a short-term financial goal you have to figure out a budget first, then start thinking about how you can reduce your debt. This is the first step to overcoming your survival mode/ adversity. After recovery from survival mode, you could then think about your mid-term and long-term financial goals.
Mid-term financial goals:
This is the goal that ties your short-term and long-term financial goals together. In this financial goal, you have to create a budget for investing some money for business or other productive things which may give return to you. Some mid-term goals may be the investment for your growth like personal development, financial development, and gathering financial knowledge.
According to many experts, mid-term goals should include wedding expenses, house building expenses, furniture expenses, and low-interest deposits like bank or post office but I would say don’t do this because it is better not to think about increasing expenses again until you think of investing money for income and arranging returns. You can move towards long-term financial only if your earnings increases.
Long-term financial goals:
Your mid-term financial goal will carry forward you towards your long-term goal. Long-term goals are the real big financial picture of your life where you need to clarify what you want to achieve financially in life.
To get out of the middle-class life and make yourself financially strong, you need to set long-term goals. The main object of setting a long-term Financial goal is to overcome all liabilities and increase your assets. This long-term goal budget should include some liabilities such as your dream home, car, or furniture. Long-term goals will help you to achieve financial freedom. Budgeting for mid-term goals Whatever you plan to invest in personal development and financial development will help you achieve your long-term goals.
Actually first of all you should determine your long-term financial goal and following it you have to decide your mid-term and short-term goals. The long-term goal is your actual destination. Until you know that destination, you have no idea what logistics you will need on the way, what transportation you will need, or what route you will take.
The strategy to achieve long-term goals is your short-term and mid-term goals. Perfect strategy or good planning can only be done when you have clarity about your financial mission and vision.
Why financial goal setting is very important:
We call those vagabonds who wander aimlessly, we also behave like vagabonds in all areas of our lives where we do not have a specific goal. Meaningful financial goals lead you to a debt-free life and will make you financially free. If you really want to Boost Your financial health, you must have specific financial goals, otherwise, you will have to struggle for money for your whole life.
If you want more money to be wealthy, before doing anything first set your financial goal because you must have clarity about what you want, and how much financial success you want to achieve.
Everyone wants more money, but they have no clarity about how much more. Suppose you had $100 and I gave you one more dollar, so you definitely have more than before, is that what you wanted? No, never! So you need to be clear about how much do you really want, and to do this you must have to set financial goals. Whenever you have clarity about how much you want you will understand how to achieve it. Otherwise, it will be like going down into the water without measuring or knowing the depth and you will keep drowning in the middle.
Having a specific goal for anything means having a high level of motivation to do it. Having a financial goal means you can create your strategy and action plan to achieve it. You can measure your progress, and you can understand your weakness and strength. After all, having financial goals means you’ll be able to stay on track by balancing your debt and credit.
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| from Pixabey |
Must be considered:
Before setting financial goals, you need to consider a few important things, like –
1) knowing which are assets and which are liabilities:
Things that are considered assets to the average person and middle-class families, such as houses, cars, or furniture, are not assets at all because their purchase price or manufacturing cost is always higher than their sale price. Again, if you buy land, its selling price will be higher, so land is an asset. This is why when setting financial goals, make sure that your liabilities never exceed your assets.
2) You must have financial knowledge and if not, consult an economist:
Most people want to become financially successful but many have no knowledge of economics. Counting money, recording daily expenses in a diary, and calculating how much money is deposited at the post office, bank, or insurance company is not the part of financial knowledge. You need to know if your income is 1000 dollars today then how to double that number next year. Financial knowledge is about acquiring proper knowledge about how to increase assets by reducing liabilities and in which areas of investment will give you suitable returns and income even after retirement.
How to set your financial goal:
Create your financial goals in three steps:
First, you need to set long-term financial goals, that is, what you want to achieve financially in 20 years or 25 years, and make a detailed list of the assets that you want to create. Write down in detail the amount of financial flow and financial freedom you are expecting even after your retirement. Along with this, you should also have specific plans to fulfill your dreams such as houses, cars, or other luxuries.
In the second step, write mid-term goals, where your focus should be on how much you will invest to increase your income. You should also budget for your liability expenses like child’s education, home maintenance, medical, and self-improvement expenses. Create a budget for emergency funds so that in case of any financial crisis, you can fund easily to solve the problem.
The third step is the short-term goal, this is your initial booster dose. The method of dividing the long-term or mid-term goals into small chunks and achieving them will be mentioned in this last step. There will be a plan to gradually reduce the debts in the short-term goal. The main purpose of setting your short-term goals is to bring about an income-expenditure balance.
Clearly state your financial goals in simple language:
You must have a written statement of what amount you want to see in your bank account and within how many days you want it. Write down in bold letters what property you will own in the next twenty years, how much money you will spend on luxury, travel, etc. Write down how much money you want to earn after 5 years and write down the possible methods.
Take the following steps to finalize your financial goals:
Step 1) Figure out what is more important today for you. Rank your spending areas in order of importance over time. Put the most essential expenses first and write down the total number of possible expenses.
Step 2) Then see which expenses you can easily bear, that is, you will not have to face any difficulty to bear from your current income.
Step 3) Now calculate how much money you can have left after excluding the above expenses, plan to keep some emergency fund from it, and think of investing the rest in a way that will increase your monthly income.
Step 4) You must have Cristal clear clarity about –
- Your current situation.
- Your debt.
- Your budget.
- Daily expenses.
- Risk factors.
- Your outcome.
- Your resources.
- Your passion and as well as mission and vision.
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