Each of us has a variety of lifetime objectives—which can range from personal, family, health, professional and beyond. Have you thought about your financial goals and how they are intertwined with these other objectives?
While it seems easy, people struggle more with identifying their financial goals than other personal goals. Financial goals do not have to be complicated—you can simplify the process by thinking of them as a single way to measure this specific aspect of your life.
As with other areas of your life, financial aspirations should be unique to your situation. They should be crafted to reflect where you are now and what you want to achieve. You will likely have short-term, intermediate-term and long-term financial goals.
Identifying Financial Goals
In developing your goals, you need to determine what you want to accomplish—and when you want to make that a reality. Your goals can be wide-ranging and include plans like saving for a new car purchase, planning for retirement or continuing your philanthropic work by providing funds on a regular basis—or later in life—to charities that are important to you. The list of possibilities is extensive, so narrowing it down to what’s most essential to you is the starting point.
After you’ve developed your list of goals:
- Write them down. There’s a psychological benefit to seeing the goals on paper. Studies have found you’re 42% more likely to achieve them if you write them down and revise as needed.
- Prioritize your goals. Rank them from most important to least important and determine whether they can be achieved in the short, intermediate or long-term.
- Take action. Are you doing enough to make your goals a reality? How do you know? What changes should you make? Are your goals realistic? How are you monitoring your progress?
Things to Consider
An important financial goal for everyone should be to have a cash reserve to cover emergencies. Is your top priority to pay off debt such as student loans, car loans or credit card bills? Finding a way to balance between saving money and managing debt is essential to a successful financial future.
Do you have children or grandchildren you would like to see go to college and graduate without massive debt? According to NerdWallet, the average loan debt for a bachelor’s degree among the class of 2019 was $28,950—and it goes up from there.
What about your retirement plans? Are you counting on Social Security as a financial resource, and should you? The Great Resignation occurring during the COVID-19 pandemic has shown that employees want to leave the workforce as soon as possible. Have you thought about joining them earlier than you originally planned? Create an online account with the Social Security Administration at ssa.gov to review your earnings record, get an estimate of your future benefits and determine how much of it you want to bank on.
The sooner you identify and start working toward your financial goals, the better prepared you will be to reach them. Listing all your financial goals can help you fine-tune the big picture for years to come. Prioritizing your goals, determining how much you need to reach them and tracking your progress is time well spent.
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