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Financial Planning
Setting Financial Goals |
Financial planning is a skill you should learn and
practice. After all, it's something you'll be doing for the rest of your life. If you take
the time to do it right the first time, you'll be light years ahead of your peers.
The first step of successful planning is to identify your personal financial goals.
The only way you can create a financial plan is by knowing what you're working to achieve.
Start with some of your dreams. What are they? How do they compare with the following list
of goals:
- Eliminating personal debt.
- Building up savings.
- Starting an emergency fund.
- Paying for children's college.
Saving for a new home or a new car.
Investing for retirement.
Saving for a vacation home.
Traveling.
Raising children.
Getting married.
Paying for long-term care.
Passing wealth to heirs.
Owning a small business.
Giving to charity.
Goal-Setting Process
To meet your financial goals, you have to take some
necessary steps. There is a simple goal-setting process that you can follow.
1) Identify Your Goal. Make a list of all the goals you've identified and
prioritize them. What are the things most important to you? What sequence in time are they
likely to occur? Are there any competing goals?
2) List a date for achieving your goal. A goal is only attainable if you
set a date for it. Otherwise it's not really a goal, is it? Make sure the date is
realistic and corresponds to your goal. "In five years, I want to have a down payment
for a new home" is more realistic than "Next week I will become a
millionaire". Unrealistic goals lead to unhealthy expectations.
3) Write it down. It's hard to remember your goal if you don't have it
written down. Put your goal on a sticky-note or piece of paper and place it somewhere
where you'll see it everyday -- like a refrigerator door. Be specific. Being reminded of
your goal will help you stay focused.
4) Monitor your progress. You'll never know if your attaining your goal
if you don't keep track. Monitor your progress once or twice a year to see if your on
course. You may have to make periodic adjustments in order to successfully reach your
goal. Don't get upset if you have to alter your plan because of small bumps in the road.
Next: Create a Financial Plan
Financial Planning Calculators:
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• What will it take to become
a millionaire?
• How much will my savings be
worth?
• What will it take to save
for a car, home, etc.?
• What will it take to save
for a college education?
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