Hi – today I want to show you how you can define your financial goals one step at a time. Now let me ask you this, would you get into your car and expect your GPS to get you to a specific destination without entering an address? Probably not. The same applies to your money, you cannot expect you money to get you to that happy and prosperous place without you giving it any further instructions. So i want to share with you the five steps in defining your financial goals. Step number one, is to make them SMART. SMART is an acronym that stands for specific measurable, attainable, relevant and time-bound. For your goal to be specific it means that you answer the question what do i want to accomplish, who is involved, why and how. Measurable means that you answer the question how much or how many. Putting a measure on your goal will help you gage your progress and you will know when you have achieved it. Attainable means that it’s not unrealistically out of reach. Be optimistic by all means, but be realistic as well. Relevant is a goal that is true to who you are and it is relevant to your own values. And finally time bound is the deadline that you’re giving yourself to achieve your goal.
For example if your goal is to retire rich, a smart way of putting it would be to say I want to retire at the age of 55 in the carribean, be a hundred percent debt free and have accumulated two million dollars in assets, properties and investments. Now that’s SMART.
Step number two, think in terms of different time periods. Short term, medium term and long term. So you can have financial goals that you want to achieve in the next year, for example accumulate five thousand dollars in my emergency fund. Medium term goals are the ones that you want to achieve in the next five years, for example pay off thirty thousand dollars of credit card debt. And finally the long term goals are the ones the you want to achieve in the next ten years, for example pay off the full balance of my mortgage or accumulate one hundred thousand dollars in my retirement fund.
Step number three, once you have defined your goals, you will likely have multiple ones in each time frame so it’s important for you to assign a priority for each one, high medium or low. And then you can direct your focus and attention on the highest priority ones first.
Step number four, keep them alive. If you write down your goals and forget all about them then you won’t see any results. I recommend that you write them on a little post it note and stick it in your wallet. Or if you’re into creating vision boards then it could be another way to keep them visible. Most importantly twice a year and update them if necessary.
Step number five, you must align your daily actions with these goals. So the way you spend money on a daily basis should be in synch with your goals. So you can’t have a goal to pay off your credit card this year and you eat out every day. So ask yourself what habits do I need to adjust in order for me to achieve my goal?
To summarize, make your goals SMART, think in terms of different time periods, put priorities, keep them alive and finally synchronize your daily actions with your goals. And if you need any gelo you can always reach out to me by phone or email.