Family Finances: The Importance of Setting Financial Goals
Provided by the International Finance Corporation
A goal that remains in your “mind” only is not an achievable goal. Just thinking about wanting to accomplish something is not enough. If we never write down a goal, it can never make the transition to being fulfilled. It’s the difference between dreaming and goal setting. And how many dreams actually come true? A goal can be accomplished while a dream is something to be longed for.
The best way to accomplish a money goal or objective is to write it down. The simple act of putting the goal on paper increases its success rate immensely. It may seem hard to believe that the best way to increase your odds of succeeding is something as simple as writing it down. But once the goal is written down, the mind starts working on ways to make this goal a reality.
Once a general goal is chosen, you need to start writing down steps in the process of achieving the goal. By breaking up the goal into manageable pieces, it does not seem overwhelming. Most goals are attainable if the will to succeed is present and the goal is not an impossible one to achieve.
Here are some tips on making a successful financial plan that will help you reach your goals:
1. Start as early as possible.
2. Set goals.
- Identify what you want, when you want it, and how much it will cost.
- Include both short- and long-term goals. Short-term usually applies to something you would like to accomplish within one year. Examples may include saving for a down payment for a car or paying off a credit card. Long-term goals refer to something that takes a year or longer to achieve.
- Be realistic.
- Involve family members in the discussion.
3. Include both short- and long-term strategies.
- There should be a strategy to reach each of the desired goals.
- Remember that short-term goals can lead to the achievement of long-term goals.
4. Support the plan with a practical, working budget.
- Commit to putting aside a certain amount of money on a regular basis.
- Consider having automatic transfers or payroll deductions linked to your savings account.
5. Review the plan on a regular schedule.
- Revise when necessary.
- Be flexible.
6. Do your homework while working on your plan.
- Give some thought to your options, and be flexible.
7. Put the plan in writing.
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