What Is A Financial Goal?
A financial goal or financial target is an objective which is expressed in or based upon money.
Why Are Goals Important?
Goals keep a person honest.
There is, however, a difference between setting vague goals and setting specific goals. A goal should be clear and concise with a specific timeframe.
“I want to make $100 on my side hustle.”
This is a great goal, but we can do better.
“I want to make $100 on my side hustle in the next month.”
The second goal has a specific timeframe. This timeframe makes it very easy to track your progress. Halfway through the month sit down and determine how close you are to the goal. Maybe you have made $60, great you’re on track. If you have only made $40, then you know it’s time to push yourself harder the rest of the month.
Short Term Goals
Short term goals, to me, are things that can be obtained within the next few months. In reality, “short-term” can be up to the person writing the goal. Maybe you want to take a trip or simply save enough for an emergency fund.
The important thing to remember is to make sure the timeframe is set in a way that the goal has natural check-in points. Having these check-in points, in my experience, help me to stay honest with myself about achieving my goals.
Another trick I use is putting reminders on the calendar in order to check on my goals progress.
Long Term Goals
Long-term goals are very different. They might be things like “I want to retire early”, or “I will pay off my home in under 10 years.” These goals have a much longer outlook, but the execution stays the same. The goal has a timeframe in which to be completed, while also having natural check-in points.
Your Goals Should Scare You
When setting a financial goal, especially a long-term one, at first it should scare you. It should be intimidating. From there take the approach of breaking down that scary goal into smaller goals. Pretty soon that intimidating goal will have a clear path to success laid out in front of you.
Take the following example.
Say your long-term goal is to own multiple rental properties. Now let’s work backward.
Logically to have multiple properties we first have to start with one.
In order to have one property, we need to save enough money for a downpayment.
In order to save for a downpayment, we’ll need to figure out where we have extra money to save. If there isn’t any in the budget then we will need to do one of two things earn more or spend less.
Now you have a short-term goal, determine a way to earn more or spend less by the end of the week.
What do you do in order to track your financial goals?