We often start thinking about, and working towards, our life goals when we’re at school. We decide what job we want after we’ve finished school and work out what we need to do to get there. So we’re aware from a young age (to an extent) of the importance of goals and their impact on our day-to-day lives.
Financial goals are also important. But many people get stuck on establishing them. So let’s take a look at what financial goals are, why they’re important and then look at how to work towards them.
What are financial goals and why are they important?
What you do now determines your financial future. And that’s where financial goals come in.
Financial goals are the personal objectives you set for how you’ll save and spend money. They may be goals you want to achieve in the short-term or further down the track.
Some examples of financial goals include:
- buying a house or investment property
- do more travelling
- earn more money
- build your credit rating
- pay off debt
- leaving a financial nest egg for your children or grandchildren
The possibilities for your money goals are endless. And they’re also different for everyone.
Financial goals are important as they can carry you towards your life goals. And this is regardless of how far away in the future that end goal might be.
If we don’t set goals, we often feel as though we’ve got little direction or purpose. So it’s easier to reach your goals if you identify them in advance.
But how do we achieve them?
We need to split our financial goals into small measurable tasks. And it’s also important to have some short-term and medium-term goals as well as long-term ones.
When you write down your financial goals, categories them as either a:
- short-term goal
- medium-term goal or
- long-term goal
So, if your goal is to buy a new house, you should ask yourself “what do I need to do to actually buy that house? How much is it going to be? What size deposit do you need? What other things do you need to do?
When you know how much money you’d like to spend on a house, you’re able to calculate how much of a deposit you need to save.
The key here is to break your bigger goals into smaller measurable goals. Why? Long-term and larger goals can feel unachievable which, in turn, causes overwhelm. But if we break them into smaller goals, they can feel a lot more achievable.
What if I easily get distracted?
I call this the bright shiny thing syndrome. You get distracted by all the bright shiny things (new smartphone, anyone?) And, like Dory in Finding Nemo, you end up forgetting what you’re doing.
But you need to keep your end goal in mind. You’re talking about putting little bits of money away each fortnight or month. And, after a while, you’ll find that you get better at it. It can be easy to give up when you don’t achieve anything the first time around.
But you’ve got to keep at it. The more you practice saving, the better you get at it.
Some tips to get started
- Write down each of your financial goals. And then categorise them into short, medium or long term goals
- Set a target date for each financial goal. Being specific is a great motivator to start working towards your goals. It gives you a timeframe to work towards
- Prioritise each goal as either critical, need or want. Why? Because, if need be, you’ll know what to fund first
- Know your numbers. Yes, this can be seem scary at first but you need to know how much you have and compare that with what you need to save.
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