Why do we find it necessary to set New Year financial goals?
• Because we realize there are some very important things we need to do with our money ? No!
• Because we realize this New Year brings us fresh desires ? No!
Let’s face it. The reason we want to set New Year financial goals is that there are some things we would rather not do but we stand to lose if we let them be. So we want to coax ourselves into doing them. How many people, for instance, would pay for the elusive magic pill to keep their weight constant rather than have to go to the gym? Of course almost every hand is up!
So, having said that, and acknowledging that we don’t want to become losers, we need to be realistic about setting our goals. One thing we must accept is that we cannot all accomplish the same things. If, for instance, you are terrified of seeing your image on stagnant water, it would be absurd for you to incorporate your friend’s goal of competing in the next national swimming competitions in your list. But that doesn’t mean you shouldn’t aim high-no; just be realistic. By the time you learn to float on water and make yourself comfortable on the deep end of the pool, the competitions will be here and gone.
Here are five good ways to set financial goals:
1. Know what makes you tick
Once you understand the things that make life meaningful for you, you will want to make them happen. It may not be easy to achieve them, but at least you will be motivated to make sacrifices to make them happen. If, for instance, you want to own real property with buildings customized to your taste, you will set goals directing you towards making necessary savings. Once you set a specific fraction of your income for leisure, you will discipline yourself to adhere to the rest of the budget to the letter just to ensure you make the necessary savings.
2. Acknowledge your weaknesses
Once you admit to yourself that some of your weaknesses are responsible for derailing you from your goals year in year out, you will be ready to circumvent them or seek necessary assistance. For example, if you told yourself you wanted to enroll in a gym two years ago when you weighed 68kg when you should have weighed 58kg as per your BMI, and you didn’t get around to doing it, and when you checked the following year you weighed 75kg and you swore you must accomplish your goal this time but actually never got to starting, what makes you think that just because you now weigh an unhealthy 81kg you are going to achieve the goal?
You need to come to terms with your weakness and either get a disciplined friend to tag along to the gym, or dig deep into your pocket and engage a personal trainer who will not take nonsense from you. If you don’t, you may find yourself in a situation where you no longer weigh yourself and you no longer have your BP checked because you fear the worst. That is, until you hit rock bottom. That does not have to happen because the pain of coming out of such a pit is excruciating. And that analogy goes for debt clearing, paying for further studies and so on.
3. Be SMART with your goals
• You should be Specific about what you want to achieve, e.g. saving and enrolling for a Masters degree.
• Your goals should be measurable: You will be able to tell if you have a Masters degree or not within the time you have set, say 2016.
• Your goals should be attainable. If as at now you are in bad books with the credit bureaus and it is years since you checked out of your parent’s house, how on earth will you finance your further education? Surely, not now. You do not qualify for credit and you have no sponsor ? you need to work with facts.
• Your goals should be relevant
If you are a big sheep rearing farmer, it would be relevant for you to set a goal to dominate the mutton export market in 2015 whereas anything close to that would be irrelevant to, say, Michael Schumacher, the legend of Formula One.
• Your goals should be time-bound.
You can tell at any particular time how far you have gone with your Masters program.
4. Write down your goals
Once on paper, that becomes a commitment which you will be ashamed to break. Going back to the paper will always re-charge you and make you assess your progress along the way.
Again, once you see all the goals before you, you will easily be able to see if there are some that are incompatible and hence prune your list accordingly. For example, you may not be able to pursue a Masters program of your choice if it is the same year that your company has chosen to sponsor you abroad for a course in forensic audit.
5. Prioritize your goals, break them down, and keep reviewing them
You need to know what goals to pursue single-mindedly irrespective of any eventualities and which ones can be modified. Also New Year financial goals are like budgets: you need to review them periodically the same way you review your budget and evaluate progress. Somewhere down the line, for instance, you may decide to slash your vote to charity or change your holiday destination in order to fulfill some high priority financial goal like paying off a mortgage.
When you break down your goals, say from the annual plan to a quarterly plan, a monthly plan, and down to a weekly plan, you will find yourself ‘taking care of the pennies’ on a daily basis and ultimately you realize that ‘the dollars have taken care of themselves’. Every financial move you make at any time of the year has an implication on your overall financial goals.
How did your last years goals go? Did you accomplish what you set out do do? Got a unique way to record and chase your goals? Leave us a comment and dont forget to share for all the other goal orientated friends!
***Photos thanks to Sean MacEntree & Cherry Point***