Writing down Specific Financial Goals

We set goals in our everyday lives as a way to measure performance or to aspire towards a dream. Interestingly, many people do not have financial goals planned out and at best they dream of being rich but that hardly pushes the boat in the right direction. In fact, having an unrealistic or unclear financial goal is as good as having none. A good financial planning concept is simple like ABCDE; Assuring incoming capacity, Building Wealth, Controlling expenditure, Distribution of wealth and managing Expectations.

Writing your financial goals (literally)

One good way to set such goals is to be SMART about it. (Specific Measurable Achievable Realistic Time-bound). Grab a notepad and start penning down everything that is important to you in life. While this may seem messy and incoherent but that is exactly the purpose; to create a definition on your goals as your mind articulates it into writing by trying to be as specific as possible. This can be anything from buying a car, taking your parents on a trip, getting married or even making more money.

Setting up the coordinates

With your new financial road map in hand, you will need to begin plotting the best route to achieve your goals. You will realize that “smaller” points or short term goals sometimes make up a medium or even long term milestone.

An example of short term goals are those that are achievable within a year, like planning for a holiday with your loved ones or friends. In contrast, a long term goal may take years or even decades of commitment to reach and usually more “big-ticketed”. Weddings, plans for further education, buying a house are good examples.

These goals should also be prioritized to values that you believe in and maintain a healthy balance of family, career and love in your life.

Now what?

To achieve these goals, begin budgeting your expenses versus your income and allowances on a yearly outlook. One formula on budgeting is built around the 10/20/30/40 rule which divides your income into; emergency cash/ CPF/ medium to long term plans/ expenses respectively. Many tend to overlook expenditures that occur periodically such as insurance, tax, cable subscription fees that can result in a gap when budgeting. Such a gap may create a pitfall when planning ahead for future savings or even result in overspending.

You can begin evaluating on area of expenses that are “overweight” and deciding if it is indeed necessary. Under utilized gym memberships can be swapped for home based workouts and eating out in restaurants may be substituted with healthier home cooked options. It should not be confused that budgeting means being stingy but rather to be frugal in our choices and that the excess in our lives can unduly slow us down to where we want to be.

Rewarding yourself

It will be tiring and dreadful if all financial decisions has to be cross-checked with your road map or your budgeting formula. Occasionally, an additional “want” or new short-term goals can be made along the way to reward yourself. You can also tag short-term goals to create some excitement  and motivation to reward yourself for achieve a mid-long term goal. For instance, treating yourself to a holiday after repaying a loan or buying a car following a job promotion.

Conclusion

We all have different degree of needs and wants versus savings to achieve our goals but the idea is to have a budget defined. The purpose of having a financial goal and budget can only be truly meaningful if we stick to it diligently. From time to time, it is motivating to review your financial goals with a loved one or even a financial consultant whom may provide a fresh perspective on tips to achieve your goals with insights on new investment opportunities.