Finer Finance Fridays #8
The Six P's: "Proper Planning Prevents Painfully Poor Performance" Some of you might remember that phrase a little differently, me too, but my blog is family friendly. So, let's go with these Six Ps'...LOL - Laughing Out Loud!
Financial goal-setting is the key to building wealth. Studies have shown that, at every income level, people who set goals and are “planners” are more successful financially, and feel better about their financial situation, than those who do not plan ahead. Financial goals are like the itinerary receipt for a plane trip. They tell you where you want to be in the future, how much the “trip” costs, and an estimated time of arrival.
Do you have financial goals or are they merely dreams? A dream is vague like “I want to send my child to a good college,” or “I want to pay off my student loans, or I want to live a comfortable retirement”. A goal is very specific with a date and dollar amount. For example, “In four years, I will save $12,000 for a car” or “By the time I am 60, I will have $250,000 saved to be able to afford to scale back to part-time work, or "In three years I will be a Centennial Visionary, Circle of Pearls $5,000 Donor!" How do you set a financial goal? Write the goal down by answering the questions who, what, when, where, and why? Since this is YOUR goal, begin your goal statement with “I/We”. Then state exactly what you want to accomplish. Include specific dates in your goal statement and state exactly what you will do to achieve it and how (e.g., save $5,000 annually). Keep re-writing your goals until they are not only SMART - Specific, Measurable, Agreed, Realistic, and Time-Bound, but SMARTER:
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Use a Financial Goal-Setting Worksheet (see below) to calculate the amount you need to save monthly to reach your goal(s) within the time period available to save or invest. Be ethical in the actions you take to save, and the worksheet serves as your recorded information. So, now you are being SMARTER about your financial goals and plans!
Once you’ve done the math, tell other people about your financial goals so they can hold you accountable. Then track your progress (e.g., amount of money saved or debt reduced) and make changes to your goals as personal circumstances or economic conditions change. Bottom line: determine your financial goals and know what you are planning for! Remember, you can’t reach a financial goal if you don’t set one. As someone who plans in most areas of my life, I am fond of the saying, "people don’t plan to fail; they fail to plan" and they don't set financial goals. Don't be that person! Plan SMARTER!
Click on the links below to download helpful resources. The worksheets are available in Excel and PDF Format for your reference:
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