Finish Rich By Setting Smart Financial Goals

April 2nd, 2008

To get where you want to go in life, it is important to decide in advance how you will get there. Managing your money wisely is the best way to make sure you and your family gain financial security.

To manage your money wisely, start by setting financial goals and establishing a budget plan to help you achieve those goals. Financial goals are simply statements about things you wish you could afford; for example, you may have a goal to establish an emergency savings fund of $1,500 in the next 12 months.

What are your personal financial goals? If you had $1,500, what would you do with it? Invest it in your small business? Buy a car? Make a home improvement? You will be able to accomplish your goals if you manage your finances and put money aside on a regular basis. The key is to setting financial goals that are Specific, Measurable, Attainable, Realistic, and Time-Bound (SMART):
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Goals serve as your guide to personal, career, and financial success. By keeping specific goals in view, you can direct your energies toward achieving them. Financial goals are important because they help you to organize and direct your financial lives, provide a framework for decision-making, and help you visualize your financial future.

How can you establish the financial goals you need to achieve your dreams? You have to be SMART about it!

S	Must be SPECIFIC with dollar amounts, dates, and resources to be used in accomplishing the goals. A specific goal has a much greater chance of being accomplished than a general goal!Goals should be straightforward and emphasize what you want to happen. Specifics help us to focus our efforts and clearly define what we are going to do.General Goal Statement: I want to improve my finances. Specific Goal Statement: Next month, I will set up a budget to track my income and expenses and free up $100 a month for investment purposes.
M	Must be MEASURABLE; if you can’t measure it, you can’t manage it. Determine regular amounts weekly, bimonthly, or monthly to set aside to accomplish goals. Another good “M” word to consider is MUTUAL. Goals that are mutual or shared with other family members will be easier to achieve. It also is important to think about how you will keep yourself and other family members MOTIVATED to achieve goals, especially long-term goals. Choose a goal with measurable progress, so you can see the change occur. How will you see when you reach your goal? Be specific! Establish concrete criteria for measuring progress toward the attainment of each goal you set. To determine if your goal is measurable, ask questions such as……How much? How many? How will I know when it is accomplished? General Goal Statement: I will save money. Measurable Goal Statement: I will save $1,000 in a year by putting aside $3 each day.
A	Your goals need to be ATTAINABLE given your financial situation. When you identify goals that are most important to you, you begin to figure out ways you can make them come true. You develop the attitudes, abilities, skills, and financial capacity to reach them. You begin seeing previously overlooked opportunities to bring yourself closer to the achievement of your goals. A goal needs to stretch you slightly so you feel you can do it and it will need a real commitment from you.You can attain most any goal you set when you plan your steps wisely and establish a time frame that allows you to carry out those steps. Goals that may have seemed far away and out of reach eventually move closer and become attainable, not because your goals shrink, but because you grow and expand to match them. When you list your goals you build your self-image. You see yourself as worthy of these goals, and develop the traits and personality that allow you to possess them. General Goal Statement: Next year I will pay be debt free. Attainable Goal Statement: I will not get further into debt and will pay $1,000 off my total debt by the end of the year
R	It is important that your goals are RELEVANT and REALISTIC. This is not a synonym for “easy.” Realistic, in this case, means “do-able.” What RESOURCES are available for you to use in achieving your goals? It is also important that you REVIEW and REVISE your goals periodically as necessary. To be realistic, a goal must represent an objective toward which you are both willing and able to work. A goal can be both high and realistic; you are the only one who can decide just how high your goal should be. But be sure that every goal represents substantial progress. A high goal is frequently easier to reach than a low one because a low goal exerts low motivational force. Set the bar high enough for a satisfying achievement! General Goal Statement: By managing my money well, next year I will become a millionaire. Realistic Goal Statement: By managing my money well, next year I will have an emergency fund equal to three months of living expenses.
T	You need a specific TIME-LINE for accomplishing your goals. To achieve those goals, you must also be willing to make TRADE-OFFS in your financial life. Know the difference between needs and wants. Because there is never enough money to fund all of your financial goals at one time, you need to prioritize your goals. A goal should be grounded within a time frame. With no time frame tied to it there’s no sense of urgency. “Someday” won’t work. But if you anchor it within a timeframe, “by May 1st”, then you’ve set your unconscious mind into motion to begin working on the goal. General Goal Statement: I will be debt free as soon as possible Realistic Goal Statement: I will be debt free within 24 to 36 months.

Take the time to put your goals in writing. Putting them on paper will reinforce their significance. Use these guidelines to help you list short- and long-term financial goals. Then, to stay motivated, visualize how you will feel when you accomplish your goals. If you are SMART about setting financial goals, you will be well on your way to managing your money in a way that will provide financial security for you and your family for years to come.