Setting financial goals can be a very powerful factor that influences the everyday experiences of your life. You can be 10 years old or 100 years old it does not matter, you should have worthy and attainable financial goals if you want yourself and those you care about to have a prosperous life.
However, the majority of people do not set financial goals! One reason can be just how daunting it is. In order to set financial goals, you have to have an idea of where you want yourself, your business, and your family to be in the future and that can be a hard task. Another reason why people don’t make financial goals is the simple fact that they do not know how… well, here are a couple of tips to help you create and stick with your financial goals so that you may live a life worth living and get rid of the financial stresses in your life.
Figuring Out the Future
In order for you to be able to set financial goals, you must first visualize exactly what it is you want and what you want for your family. Then apply the SMART (Specific, Measurable, Achievable, Relevant, and Timely) rule to your goals. What age do you want to retire? Do you want to have enough money to pay for your kid’s college tuition? What about a private jet? Maybe you want to turn your company into a Fortune 500 company? You must dig deep and ask yourself what you want from life. You must take this step very seriously and with absolute truth because this is the foundation on which ALL OF YOUR ACTIONS stand!
Once you’ve visualized what you want for yourself and your family you must write it down. Failure to write down your goals can lead to you losing focus on them and ultimately forgetting about them. Writing down what you want from life adds a sense of clarity. When you have clarity on what you want from life it makes obtaining these wants and goals a lot easier.
After visualizing and writing down what you want from life its time to get to work! Create a plan of action and work through this plan. I will teach you here exactly how you can create a plan to accomplish your new-found goals.
Making A Plan to Accomplish A Goal
For example, say you want to pay for your children’s complete college tuition and I will break this down for you in a few easy steps. We’ll say they are 5 years old.
First, you must calculate the amount of time you have to accomplish this new-found goal.
Say your child is 5, so you should have 12 years to have at least ¾ of their tuition seeing as how you may come up with the remaining money for the 4th year during their time in college.
Now you must find out how much money you must save in order to pay for their expenses.
In its most recent survey, the College Board states that the average college tuition for an in-state public college for the 2017–2018 academic year has an average fee of $25,290. Times that by 3 and its $75,876 for 3 years today. Now, what would this tuition be in 12 years? According to, collegeboard.org, Between 2007-08 and 2017-18, published in-state tuition and fees at public four-year institutions increased at an average rate of 3.2% per year beyond inflation, compared with average annual increases of 4.0% and 4.4% over the two prior decades. So, if you take the 3.2% increase every year that brings our total to $110,728.85. Divide that by 12 and you must save $9,227 every year starting now to be able to pay for your child’s tuition. However, if you can put this savings into an investment account and get on average 9% a year return, then you only have to save around $5,497.77 a year.
Determine exactly how you are going to accomplish the yearly goal.
Creating a budget is an easy way for you to know if you can afford this yearly cost or not. If you can’t afford this, seeing as saving $5,000 every year is nearly impossible for many Americans you may need to change your goal to only helping your child pay for college. However, if you are dead set on this and you can’t save this much then you must find a way to increase your income ASAP because the longer you wait the more you have to save. If you can afford to save this much, then you must find a way whether it be ETFs, Mutual Funds, or any College Funds that can offer a good interest return around 9% yearly. Now that you know what you have to do and have started making progress you can move on to step 4.
Now that you have everything figured out you must protect your progress from outside forces and most importantly, from yourself.
Now that you are saving money and putting it in an account that can give you around a 9% return on your money every year you must put checks and balances in place to protect this progress. First, you should make your transfer to the College Fund account automatic and immediately after you are paid. This will stop you from giving into temptation and using that money on something else. Also, you may want to have an emergency fund so if any accidents occur it doesn’t force your hand into taking money out of the College Fund.
Keep on making progress and DO NOT STOP!
I hope these steps give you some foundation on which you can create your own financial, personal, and relationship goals.
“Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success.” – Pablo Picasso
Accountability and Goal Reviewing
The easiest way to keep track of your goals and stay motivated is to do a weekly review of your goals. The best way to review your goals is to know exactly where you should be at in achieving your goals every week. For example, “this week I should have at least, $5,000 in my savings.” If you don’t then you need to fix some things or maybe you need to adjust your short-term goals.
This simple act of reviewing your goals can do wonders for achieving them. When you notice that you’re on track to accomplish your goals it can motivate you to keep going. When you notice that your falling behind it can give you that kick you need to get back on track. Stay on track, take it day by day, and you’ll achieve your goals in no time!