"Winning is not a sometime thing. It’s an all time thing. You don’t win once in a while, you don’t do things right once in a while, you do them right all the time. Winning is a habit.
Unfortunately, so is losing," stated Winning financially and achieving financial goals is not a sometime thing, it’s an all time thing. The seven steps to setting and achieving financial goals are not secrets. We do it all the time on our jobs, when we set sales or production goals, cost reductions or specific project achievements.
The trick is to apply the same techniques to your finances, with the same rigor and personal management.
It starts with a winning attitude.
Steps to setting financial goals:
Step 1- Sit down with a clean sheet of paper and brainstorm the question, "What do I really want out of life?" Write down every possible financial goal that comes to mind – a house, early retirement, debt payoff, children’s education, new car, overseas vacation, etc. Dream and write them all down.
Step 2- Discuss the list with your family or people who are significant in your life. With their input, expand and modify the list. In working with clients, I find that many times they have not discussed their family’s financial goals and agreed on the priority. This lack of communication about finances can lead to serious family conflicts.
Step 3- Now go over your list a second time. This time, refine and prioritize the list, adding an element of realism to it. Write down the items that are most important on a sheet of paper called "Key Financial Goals." Cross off the items you really don’t want or need. Move anything you might have mixed emotions to a separate sheet called "Future Goals." After you have achieved some of your key goals, you may want to include some items from this list.
Step 4- Expand each of your key goals, estimating the cost (in today’s dollars) and when you will achieve the goal. It is very important that you are specific in each of these areas.
Step 5- Separate your Key Goals into short-term, intermediate and long-term objectives. Short-term goals can be achieved in less than one year and might include; establishment of an emergency fund, this year’s vacation, or minor home improvements. Intermediate goals of one to five years might include; paying off credit card debt, saving for a house down payment or making major home improvements. Longterm goals of more than five years might include; college funding, retirement or a vacation home purchase.
Step 6- Develop a plan for achieving each Key Goal, breaking down large goals into their main elements. Using the college fund example: Research public college costs; Open a 529 Saving Plan account; Invest $328 per month using automatic withdrawal from my checking account; Research investments that could provide a higher return. Step 7- Monitor your progress, by reviewing your financial goals at least annually and revising your plan as necessary.
Michael G. Shinn, CFP, Registered Representative of and securities and investment advisory services offered through Financial Network Investment Corporation, member SIPC.
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