Setting meaningful financial goals may be the smartest thing you do that will provide you with financial security and freedom in the future.
You can spend a lot of time focusing on your financial situation but unless you have specific goals you may struggle to change your current situation. Goal setting is an important part of developing your financial plan. Having clear financial goals will make it easier to focus on investing strategies to help you reach them. It will also help you measure how well you are tracking along the way.
Let’s explore why goals are so important in a little more detail, lay out the goal setting process and talk about the different timeframes that you may want to consider when planning your financial goals.
Why are financial goals important?
Investing goals are important for several reasons:
Direction – financial goals provide direction and meaning for your investing efforts. They make it easier for you to make sacrifices or stick to a budget because you know what outcome you’re striving for. They help you keep focused on the long term.
Motivation – financial goals provide purpose and energy and help you stay disciplined in your investment process. Your goals should be important to you so that they provide the inspiration for you to keep working towards them.
Accountability – writing down your goals and being accountable for your progress(whether it is just to yourself or to some significant other person) keeps you honest about how you are progressing. Regularly reviewing your goals helps keep you on track.
Accomplishment – reaching your financial goals provides you with a sense of accomplishment. Celebrating significant milestones also helps with motivation to stick with your goals.
How do you set goals?
Goal setting does not need to be hard work. It is a fairly simple process and can be done in whatever way works best for you. However, we suggest that there are a few important things you should do: