Why It is Important To Identify Your Financial Goals

identify your financial goals

When you identify your financial goals you open up your life to endless possibilities. Financial goals include much more than simply planning for your retirement at age 65 or whenever. Setting financial goals should happen while you are young and they should include every aspect of your life from now until the day you die, and then some.

Unfortunately too many people go through life earning money and spending money without putting too much thought into their overall financial well-being. Their motto is “Live for Today”.

They have difficulty imagining their future self and they have difficulty figuring out when, where, and what their future self will be doing. And because of that, they have difficulty figuring out what their financial goals are because they simply cannot see beyond next week.

Identifying your financial goals will help you see beyond next week. It will help you plan for every aspect of your future. Think of it as a project plan for your life, if you will. And having a project plan for your life doesn’t mean that it cannot be flexible as you grow, learn and do new things. It simply means that as you approach new things in your life you can ask yourself if those things align well with your financial goals or not. And if not, you know you have some important decisions to make instead of just going with the flow, as many of us do.

Questions to Consider

To help you create your financial goals today you can begin by taking some serious points into consideration, such as:

1. What are your personal values and personal characteristics?

2. Where would you like to live? Large, hectic, expensive city, or small town?

3. Would you like to settle down in one location or would you like to travel the world?

4. If you do settle down in one location would you still like to be able to take nice vacations?

5. How will you earn money? Will you work for someone else, or be self employed, or both?

6. Will you attend college? If yes, what will you study?

7. Do you hope to get married, and if so, do you plan to have children, and how many?

8. Will you have pets?

9. What type of lifestyle would you like to live? Rich and famous, or modest and unknown?

10. How much money would you like to have in your savings account on an on-going basis?

11. Would you like to invest some of your money?

Answers and Decisions

Take some time to answer these questions and as you work through them, jot down timeframes as well. For example, if you would like to get married, would you like to get married tomorrow or in five or ten years from now. And if you do get married and start having children, would you like to be in a position where you can afford to stay home and raise your children?

Answer the questions and then put them aside for a few days and carry on with your life. After a week, go back and review all of the information and make adjustments until you are happy with your answers. Give yourself a timeframe and a deadline to complete this. Typically a month or two works well, because if left too long, chances are good you will neglect it.

You will notice that the answer to each one of those questions impacts your financial goals because each of them requires money. For example, if you said that you want to have six kids you know right away that having six kids will cost a lot of money for at least 20 years of each of their lives. Start doing some math and you will see that to do that, and to provide your kids a safe and comfortable life, you need to start earning and saving money now. You cannot wait until after they are born.

And that leads you to the next point. How and where will you earn money and how will you save money so that you can afford to have a family?

On the flip side – if you would love to travel around the world for three years, perhaps you need to work for several years first while living a frugal lifestyle and saving every dime you make. And make sure that any personal choices you make will not interfere with you leaving one day to travel.

Even though this exercise may seem tedious, identifying your financial goals is important because it actually gives you a lot more flexibility in your life then living day to day on a wing and a prayer does. By knowing where you stand, personally and financially, you can make better choices with less regrets.

Use online resources and financial calculators to help figure out how much money you need to help you achieve your financial goals today and in the future.

Over to You

Do you have a plan?


Comments

    • Kate @ Money Propeller

      Kate @ Money Propeller 07/09/2014 2:55 a.m. #

      By having a solid financial goals is really important, of course you don't want to be broke when you reach your retirement age. As early as today, you need to have a good plan for your future.

    • Natalie @ Financegirl

      Natalie @ Financegirl 07/09/2014 6:56 a.m. #

      I love this post! I'm all about setting goals and knowing what you want for your future. I think having financial goals is one of the best things you can do for yourself and your family. Personally, my top priority is paying off my student loans. During this time, I'm contributing to my Roth and saving a little, but most of my money goes to student loan payments.

      • Sicorra

        Sicorra 07/09/2014 2:09 p.m. #

        Thanks Natalie! Paying off student loans takes time but I would bet that going to school was part of your financial plan and that you were well prepared to be able to repay the loan and save a bit after graduation.

    • MomCents

      MomCents 07/10/2014 2:34 p.m. #

      This is a great read! I'm all about goals ~ I've always been taught goals should be SMART
      Specific
      Measurable
      Accurate
      Realistic
      Timely

      Using that criteria, I created a series of 3 year goals, and further broke them down by years and month. When it is all said and done, we should have NO DEBT at the end of the 3 years...except for the house.

      It is exciting, and by breaking it down into smaller milestones, it keeps me motivated.

    • Agnieszka Obara

      Agnieszka Obara 07/11/2014 1:58 p.m. #

      Very helpful post. Goal setting is a must if you want to bring order into your life. It helps you sort out your priorities, give you a bigger picture of where you are at now and also help you come up with strategies to reach your objectives successfully.

    • Syed

      Syed 07/14/2014 1:30 p.m. #

      Goals are extremely important for financial success. They provide great motivation to see where you are, where you want to be, and how the journey is going. Just making changes and not being able to be sure if they're working or not can be very frustrating.

    • Michelle

      Michelle 07/24/2014 10:12 a.m. #

      I am finding it hard to find balance between what I need to be saving and what I want to be doing. I don't want to be not able to do something because I am saving for retirement, I want to be able to still do the things I want to do, not excessively of course.

    • Stephanie

      Stephanie 07/28/2014 12:26 p.m. #

      This post is awesome, Sicorra. It is so important to set goals and plan for the future. I loved reading through the questions and answering them in my head. It really does get you thinking!

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