The Importance of Setting Financial Goals

The one fact in life about money that is clear is that while you can succeed at things accidentally, you’re more likely to experience success if you plan for it by setting goals and sticking to your realistic plan of goal achievement.

If you want to be successful financially, you’ll be much more likely to experience success if you create a plan, track the plan, review the plan, adjust as needed, and keep moving forward than if you do nothing and wait for the accident.

You should have three types of financial goals:

Long-term goals

Some goals are very long-term goals and may encompass a year or more in overall planning. But you could also have a five-year plan for something such as taking five years to pay off a vehicle for your business.

Medium term goals

This may mean quarterly, or some other period that is shorter than your long-term plans. Maybe you want to plan content for your site quarterly, or you want to put out a new product every single month. This should be included in your medium-term planning.

Short-term goals

What are you going to do to earn money today? What can you track today to find out if your plans are working?

Keep business and personal goals separate

It’s important to keep your business goals and your personal goals somewhat separate because you must remain as unemotional as possible about your business. If you separate it out and pay yourself a salary, you’ll be able to separate this out easier.

Tracking is so important because that’s the only way you can know if any of your assumptions are true or false. When you discover something you thought was true is false, it doesn’t mean you were wrong or you made a mistake.

It means it is time to adjust. Find out that your bank has higher fees than you thought, this is fine, just find a new bank. Use all the information you discover in your goal setting and tracking to improve rather than focus on any type of perceived failure. That’s why your goals need to be smart goals.

Financial goals should be specific

Don’t say, “I want to save 100 dollars a month.” Say, “I want to save $100 a month by giving up two coffees a week at Starbucks.” Then take it a little further by making replacement plans so that you will not fail.

SMART goals are measurable

The specificity of the goal should mention something that is measurable. It can be money, time, height, weight, length, times, sessions, hits, subscribers, etc. Find what is measurable in that information.

You are more likely to reach attainable goals

Don’t make goals that are impossible. That’s why you need to know how you’ll reach the goal and that’s why you have that much specificity to the goal – in writing the goal, you show that it’s also attainable. At least, it’s attainable based on your research. But that is a good reason to review results. You can review your assumptions and improve.

Business goals are relevant

There has to be some result you’re working toward in the goal set up. You may be working for financial independence, so each time you make a goal, you have to ask yourself does this goal add to my overall plan for my business or not? If you are setting business related goals, now is the time to make sure that your goals contribute to your bottom line in a positive way.

Timely goals that are deadline driven

You must set a time limit for any goal to be met by. Your research that shows you how long it’s going to take you can also inform you about how long you should set the goal for. In general, you need long enough to collect data at multiple points to where you can compare. A great book that talks about the importance of setting aggressive and time bound goals is The 12 Week Year.

Set your SMART financial goals. Review your goals on a regular basis to ensure that your assumptions were true. As you learn more, you can correct anything and multiply your trajectory exponentially.

Keep reading >> From Doubt to Action by Improving Money Mindset