Setting goals is one of the most important things anyone should do before embarking on a financial health workout. Everyone needs to know what they are striving for, what they want to attain, or they will never been able to get there! It can be something as simple as wanting to be free of your debts, or vastly more intricate – I know people that have plans and goals on dozens of things.
The first step is to simply think. Make a list of the things you want to achieve or buy, both short and long term. Savings for college? A weekend out? Retirement? A car? Pay off your mortgage? A trip to the Andes? At this point, don’t censor yourself – be greedy! What is it that you want? Anything and everything; this is the list of all of your desires. If you have a significant other, spouse, or responsible dependents, make sure to include them. I personally believe that even children old enough to understand should have some say in the goals you choose that may affect them.
Now take a step back. Begin to narrow your list down to your primary objectives. The odds are that you won’t be able to reach every goal you dream of – ordinary finances simply will not allow it. Look at your goals from a more critical eye. Why are they important? What is it about the goal that matters to you? Try to rearrange your list into a ranking system: the most important to you at the top, the least at the bottom. Choose carefully and look for things that will make you feel financially secure and fulfilled. Know ahead of time that this will be difficult as many of your goals may seem to conflict; but you must decide which you desire or will benefit from more.
Try to be realistic – many factors should impact your ranking, including especially your age as younger people can afford to take greater risks than older as they have a longer period of time in which they can recover from mistakes or issues. Also consider – benefits are not purely physical. A few hundred dollars spent on a weekend away with family or friends can be worth far more (and the memories can last a lifetime) than a thousand put down on that new big-screen TV you have been eyeing. Be sure not to rank things purely based on their monetary value!
Once you have done all of this, put it away for a few days. Come back later, at a different time of day, in a different room, when you are in a different mood – just change the circumstances – and make a new list, following the same guidelines. Now compare the two: how similar are they? If your lists match up pretty well, it is likely that you know what it is that you want. The next step will be figuring out how to get it! Don’t forget to reexamine your lists regularly – at least once every two years or so. As people age and change, so do their goals in life, so take this into account.
Tags: Budgeting, finances, goals, lists, money, Retirement, savings, setting goals, workout
The article on setting goals is very good.