Financial Goals

As with anything else in life, success is not achieved without a road map or written goals. Financial success is not different. In order to achieve financial success, however you define it, it is important to have an idea of where you want to end up and how you want to get there. Your financial success will also be determined by your financial values and attitudes as well as the goals you set for yourself. Your success depends upon specific plans and those plans are your financial goals.

The first step in your personal financial plan is to take control of your day-to-day financial affairs. To do this you must have a full understanding of where you are spending money and how much money you are earning. Some people call this a budget. Unfortunately the term \”budget\” has come to have significant negative connotations. In other words, many people find they feel restricted by their budget and choose not to live by one or even understand where their money is being spent in the first place.

But, learning where your money is being spent and how it\’s being earned is definitely the first step in developing a financial plan that will allow you to retire successfully. Your budget is actually an individual plan that allows you the freedom to spend money on projects or personal items which you desire while continuing to allocate funds towards savings. It is those funds which you allocate towards savings which become the focus of your long-term financial goals, investments and strategies.

As anyone who has been financially successful will tell you, they became successful only after they made a plan and followed it. Otherwise, because of our instinctive human nature, we have a tendency to drift along and ignore the negative things that happen in our lives while, at the same time, burying our heads in the sand. Our future is left to chance and the future is not very bright.

Determining your financial goals is actually very simple. The first step is your responsibility. You must identify and write down the goals you have for your lifetime. Do you want to send your kids to college? Do you want to save for a new car or do you want a new car every five years? How many times a year to you want to go on vacation and how long are those vacations? What lifestyle do you plan on living during retirement?

These are the questions that must be answered before you can move forward in your financial planning. Once you know what your goals are for the next year, five years and 10 years or more, then it is time to get educated. This first part of financial planning is often the easiest for individuals. It\’s a time for dreaming and wishing and putting desires and interests down on paper. It is a time when the rubber has not yet met the road. (1)

However, in order to make those goals a reality and not just a dream you wrote down on paper it is time to learn how to use the money you are socking away in savings so that your money starts to work for you. You can choose to read Money Magazine, a book on investing, listen to a favorite and well-respected investment counselor, or surf investing websites. It is also important to learn from those who have come before us. So, do not rule out speaking with your friend or neighbor who seems to be doing well in their investments. Oftentimes they are more than willing to help you learn what you need to learn or send you down the correct path. (2)

At this point it is time to take action. All of the dreaming and goal setting on paper as well as education will come to naught unless you take action. Education may have been where the rubber hits the road but your action is where you\’ll find your results. You should choose one vehicle for investing, or helping your money to work for you. Learn this way of investing and learn how to do it well before you move on. In other words do not become tempted by the next great investment strategy in which to grow your money. It is more important that you learn how to do something well and become successful at it so that you achieve your long-term goals.

As with any other plan it is also important to evaluate your progress. Each quarter take stock of how much money is in your savings, how much is in your portfolio and how much you owe to others. Keep a running total in a spreadsheet so that you can evaluate it four times a year. Only through an evaluation process of your net value are you able to make the changes necessary to achieve your goals.

Remember that there are no hard and fast rules about investments or strategies. The goal is to increase the amount of money in your portfolio over time and the way to do that is to invest in vehicles that continue to grow. Which vehicle you choose and how you choose to invest your money, is truly a personal choice. However, it is also important to make wise decisions in how you spend your money so that you increase the amount you have available to fund your retirement.

(1) College Planning Center of Rhode Island: The Power of Planning; Setting Your Financial Goals
http://www.cpcri.org/RISLAsFinancialLiteracy/ManagingFinances/Settingfinancialgoals/tabid/100/Default.aspx

(2) CNNMoney: 50 Smartest Things to Do With Your Money
http://money.cnn.com/magazine/investing/smartest/