How to set financial goals for your future

Goals are incredibly important. To achieve financial success you need to set your own financial goals first and then take time to work towards them.

The most important step towards achieving financial goal is to translate financial needs into your own term. Unless we commit ourselves and preserve to achieve our financial goals, they don’t occur in reality.

How to set financial goals for your futureTo set goals you need to first find out, what is important to you and then your financial goals should be a reflection of that.

Some common goals that generally set are buying a dream home, car, education for your children and retirement.

Setting priority to financial goals

After setting it, the next step is to sort it to your priorities and add long term, medium term and short term to its description.

Goals that can be accomplished within 6 months to 1 year time can be classified as short term, 1 year to 3 years as medium term and more than 3 years as long term.

Like in our case, retirement planning, buying house can be kept as a long term where as buying car can be a short term goal.

Segregating between long, medium and short term will help you in achieving them easily.

One can even set priority for achieving these goals. You can priorities by ranking all of your goals based on their importance.

Say for example, buying an expensive car can be in less priority compare to buying a house. In case of necessity, you can postpone buying a new car by a year or two but you cannot defer your own retirement or children’s marriage.

While setting these goals you should take inflation into consideration as it will increase the cost of your goals.  Inflation can offset your financial goal in just two years. Imagine if you want to enjoy the same lifestyle after 30 years then how much you need to spend for inflation.

How to reach your financial goals

How to set financial target for your futureTo reach your financial goals, you need to choose an investment option that suits the time available for the goals.

First, find out, how much money you require to achieve all these goals. Try to estimate the amount that you are required to spend similar lifestyle in future.

After finding the total requirement to get financial independence, you need to break it down to manageable amount. Try to find out the amount that you require accumulating each month for your financial goals.

Now you know the amount that you want and the money that you can contribute each month. If your income is not enough to meet your goals then it’s time to find new sources for funding. New sources can be obtained by spending less and earning more money.

While setting your financial goals, you need to keep your personal lifestyle in mind and set goals according to your necessities. You need to have a financial reserve for your unexpected expenses like cars breakdown, house repair and maintenance and children’s education.

One of the objectives of financial goals should be insurance, without this your financial plan will be wiped out. You need it in sufficient amount to protect your and your family member’s life and health.

One of the common reasons why most of the married couple ended with a divorce is money. Make your financial goals and try hard to achieve them so that money issue should not be a reason for your break up.

Setting these financial goals and planning to achieve it will go a long way in solving your money dispute. To meet your financial goals, you need to estimate the present value of your goals and then try to find its future value by factoring inflation rate.

Editorial Staff at Yourfinancebook is a team of finance professionals. The team has more than a decade experience in taxation and personal finance.