Have you set your financial goals?

Have you set your financial goals?

I am sure you must have heard the famous quote stating that “a goal without a plan is just a wish”. This quote not only indicates the importance of setting financial goal but also to check out the corresponding action plans to achieve the set goal.

If one parameter is missing then the other would become defunct and thus both i.e. goal setting supported by action plans have to go together. So here comes an important question i.e. have you set your financial goals? While you scratch your head to respond, my experience says that not many a times I have got the right answer to this simple question, rather a vague reply leading nowhere near to the term called ‘Financial Goal’.

The reason for such anomaly is obvious, as many amongst us are not very clear on our usual goals in life, what to talk about the ‘Financial Goals’ as such. Surprisingly, without having a clear cut goal-post in sight, how is it possible to score a goal, if there is going to be one, on the way.

This is the reason why many people end up wasting the whole life in their quest to search for real happiness, which is nowhere to be found due to them not being clear on their intended goals in life. So in simple terms, “Financial Goals” are not very different for any human being, but they are just the integral part of one’s usual goals which an ordinary person aspires to achieve during his/her lifetime.

For somebody that goal may be just to buy a car, while for another person it may be to buy a house. On similar lines, one person may be aspiring to accumulate enough wealth so as to retire early at the age of 45, while for some other it may be to leave the job at 45 and start a venture of his own.

Thus, “Financial Goals” may differ from one person to another depending on their respective prevailing situations; however it is imperative for all of us to set our goals early in life.

Therefore, the first step in this direction is to identify them, and then write it down. Financial goals for a person could relate towards fulfilling numerous objectives in life, like – making savings in order to send his/her children to a prestigious school/college, buying a new car, or rather making savings for a down payment on a house, going on vacation, paying off credit card debt, or planning for early retirement.

Once we have succeeded in framing our financial goals, the next step is to break each financial goal down into several short-term goals (i.e. less than 1 year), medium-term (i.e. 1 to 3 years) and long-term (i.e. 5 years or more) goals.

This is imperative in order to set the priorities right and also to frame the corresponding ‘Action Plans’ as would require to achieve the set financial goals successfully. Now that you have your financial goals duly set and priorities in check, the next logical step is to sit down and create a ‘financial plan’ which matches your goals.

A ‘financial plan’ details how to accomplish your goals. It may include, for example, reducing unnecessary expenses, increasing one’s employment income, or investing in the stock market etc.

This is nothing but redrawing your ‘monthly budget’ so as the same is consistent with the set financial goals. One’s monthly budget must always support the set objectives of a financial goal rather than blocking it. Therefore lot of efforts must go in preparation of a right monthly budget.

From here on, one needs to approach towards the most important parameter of this exercise i.e. the ‘EXECUTION’ part. Remember, without execution everything remains on paper and nothing concrete comes out of it.

Execution of one’s personal financial plan often requires discipline and perseverance and this is where majority of human beings fail. So, finally everything drills down to the most important fundamentals of our life i.e. discipline and perseverance.

These two, without doubt are the main ingredients for not only towards attaining financial goals, but even to succeed in every walk of our life. Finally, execution is not the end of story but the beginning of a process which requires the whole exercise to be ‘monitored’ at regular intervals. We all know, the modern society is very dynamic, where things change within a spur of moment.

That being the case, our set goals would require continuous monitoring and reassessment on our part. As time passes, one’s personal financial plan must be monitored for possible adjustments or reassessments, wherever needed.

Before I conclude this topic, I must emphasize that the financial goals which you have set, must necessarily comply with the principles of ‘SMART’.

This means the set financial goals must be – Specific, Measurable, Attainable, Relevant and Time-bound. So please don’t end up setting vague goals for yourself, instead ensure that the set goals are SMART as explained.

A goal lacking on any of the specified SMART parameters will fail in the long run as it would lack the necessary impetus which is required to fulfil the desired objectives for a human being. The above sets a perfect agenda for each one of us to fix our ‘Financial Goals’, but invariably with a due care.

As with anything else in life, without financial goals and specific plans for meeting them, we drift along and leave our future to a chance. A wise man once said: “most people don’t plan to fail; they just fail to plan.” The end result for such people is obvious: failure to reach financial independence in their life. Do you want that way to happen for you, the choice is yours – plan or perish?


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