Question

What are some of the financial personal objectives?

Answer 1

The secret to setting personal financial goals is foreseeing your future needs and aspirations.

We all have dreams and wishes. To be able to plan your assets, you need to recognize both what you want and what you need to achieve in your future.

Following the SMART system for goal setting you can make your goals clear and easy to track. A smart goal has some characteristics associated with it: a dollar value, a time frame, and it must be measurable.

Think about your dearest desires and wishes and put them on paper. Brainstorming can be lots of fun. The resulting list will show what you really would like to accomplish in your lifetime. In order to set successful goals, it’s crucial that you anticipate your options, write them down, and make them smart.

Most likely you won’t be able to undertake all of the goals on your list, or not all immediately, so you need to look at your list and prioritize it, making your most important goals top priority, the ones on which you need to start acting now.

Jot down ideas of things you and your family would like to do and purchase in your near and far future, don’t worry too much about feasibility. The beauty of brainstorming is that any idea is a good idea. Write down all that you’d like to do. The weeding and prioritizing will come later.

First think far ahead, the things that you’d like to do 10-20 years from now.

What would make you feel good and accomplished in the long term? Pay off your home? Retire early? Buy a vacation home? Travel?

Then think of a shorter time, like in 3-5 years, based on where you are now.

What are the things you want to do in the medium time range of the next few years? Saving for college? Emergency fund? Eliminate debt? Buy a house? Buy a vehicle?

Then start thinking of a closer time frame, like one year from now.

List all the plans you may already have, and the things that you’d like to start within one year. Take a vacation? Buy an appliance? Pay off your credit card? Buy an instrument? Take classes?

You are now ready for thinking 90 days ahead.

What are your short term goals? Start saving on 401K or Roth-IRA or increasing your contribution percentage? Taking advantage of a business opportunity? Gifts? New TV? Fancy shoes?

A SMART goal must be:

Specific – state exactly what you want to achieve, why it is important, and how you are going to do it. Example of a goal that is too general: “I want to decrease my debt”. A specific goal would say: “I want to eliminate my credit card debt by negotiating a pay plan with the creditors and applying the money from my second job toward it”.

Measurable – assign a specific value to your goal, and establish clear criteria for measuring your progress. It must be evident when you have achieved it and by how much. Too general: “I will pay off most of my debt as soon as possible”. Measurable: “I will pay off $1,000 of my credit card debt in the next 4 months”.

Attainable – make your goals reasonable to achieve using the skills and resources that you have available. A good goal will require you to stretch slightly, but you need to feel that you can do it, or you won’t commit to it.

Realistic – set goals that are doable and you can reasonably accomplish. Don’t ignore your limitations, choosing goals too difficult to attain sets you up for failure. But don’t set the bar too low; make sure they require some effort, but within reach. To be realistic, you need to have the skills and the time to gather the resources and skills needed.

Once you have a plan on how much to spend, and how much to save each month, you’ve got to track how your plan develops.

It can be difficult to be motivated by far away goals. It might even be hard to envision them. What do I want to do in 20 years? I don't even know what I'm going to do tomorrow! Breaking down the process in 3-month periods makes it easier to envision where you want to be and what you wish to accomplish.