It can be very challenging to achieve financial goals today, even for the most financially responsible people.
Good intentions don’t get you very far if you are not careful to avoid the pitfalls and distractions that can easily derail your financial plan.
If you are serious about achieving your financial goals it is more important than ever to take proactive measures in pursuing your strategy.
It doesn’t have to be complicated. In fact, it should be fairly straightforward if you apply some basic tactics.
Here are five simple strategies to achieve financial goals:
When we finally take the time to seriously consider what we want to accomplish financially, it’s easy to let the mind run wild, and suddenly we’re swimming in financial goals.
It can be very inspiring and exciting to envision an ideal financial future, but there is a price attached to everything and, in many cases not everything is attainable.
Goals need to be prioritized as essential, important or desirable and they need to be categorized by time-frame – long term, intermediate term and short term.
Available resources must first be applied to essential short term goals, then essential long term goals and so on.
2. Determine Your Costs
If you don’t know where your target is, you’ll never hit it. In financial planning parlance that means knowing what your goals will cost in the future.
Goals such as retirement must be thoroughly analyzed to come up with realistic numbers that don’t over or understate the cost.
The easiest way to do this is to determine the cost of the goal or event if it were to occur today and then factor in the rate of inflation for the time-frame.
3. Calculate Your Savings
While financial planning is not an exact science, it must be more than a hypothetical exercise.
The numbers have to be realistic in order to take them seriously.
For each of your goals, especially your essential goals, you need to determine an amount of savings to which you can commit.
The total savings commitment must be fit comfortably within your budget to the extent that, each month, it is the very first expenditure you make – automatically if possible.
Saving calculators are available for free online which will enable you to calculate a present savings rate for a future goal with consideration for inflation and taxes.
4. Manage Your Finances
It’s time to start managing your personal finances as if you were running a business.
Strict budgeting, attentive cash flow management, focused debt reduction and risk management are essential to maintaining control over your finances and minimizing the impact of any unforeseen circumstances that may arise.
It is strongly recommended that you invest in personal finance software such as Quicken which will automate much of this.
5. Track Your Progress
With financial goals, you can’t just set them and forget it.
It is important to establish short term benchmarks which will be your indicators to tell you if you are on track to achieving your goals.
Once you get off track the gap can widen quickly and it’s much easier and less costly to make smaller, more frequent adjustments.
It’s also easier to stay motivated when you can see that you are meeting short term benchmarks.
From Achieve Financial Goals to Financial Goal Setting