Before you can create a plan for spending and saving, financial goals must be set. Goals reflect your values and provide direction for planning. Setting goals will help you balance your needs and wants.
CHARACTERISTICS OF FINANCIAL GOALS:
• SPECIFIC – Goals should be specific. How much do you need to save? How long of a time frame do you have before you need the money? How many pay periods are available to save the money? For example, you might need to save $5,000 over 2 years for a down payment to buy a house. If you get paid once each month, you would have to save $208.33 each pay period to achieve your goal.
• MEASURABLE – You will have to measure and monitor your progress. How will you do this? Do it in a way that makes sense to you. As you save money throughout the year, you can do this by your pay schedule or monthly. While saving, you can track it on a computer, write it down, or even have funds directly go into a savings account. In any event, measure your progress as you move towards achieving your goal.
• REASONABLE AND REALISTIC – Set goals that are reasonable and realistic. Don’t try to save too much each period and end up sacrificing other parts of the budget. You might have to lengthen your time frame to achieve a goal and decrease the amount you save each time. Remember, saving is a lifelong process and a consistent, systematic approach will pay off. Take some time to set your financial goals. Short-, mid- and long-term goals are important. Although the time frame that you put on your goals may vary, here are some rules of thumb:
Answer the following questions to help you list out and prioritize your short-, mid- and long-term goals:
1. What are some goals you would like to accomplish within the next 1 to 2 years?
2. What are some goals you would like to accomplish in the next 2 to 5 years?
3. What are some goals you would like to accomplish in more than 5 years?
After your specific goals are identified, complete the financial details. Here are two examples:
Goals change continuously over a lifetime. If a change is needed to a current goal, make the adjustment. As goals are reached, new ones should be established.
You don’t have to tackle your financial goals alone.The MTC Federal financial experts can help, schedule your FREE CREDIT ANALYSIS, a 30 minute one-on-one customized consultation to review your financial situation with tips to help you get on the path to a stronger financial future.