The first step for setting your financial goals for this coming year is to formulate goals that you can envision yourself achieving with your current job and income. One of your goals may be to boost your income or change your career, but those are not financial goals, those are career goals. Let’s stick to your money for the sake of the topic of this blog. So many people fail at achieving or following through with their new year’s goals, because they dream too big or their eyes are too big for their stomach. There is a time and place for dreaming big and having visions, but you must take those dreams and visions and refine them into real, attainable goals.
An article from Jeremy Vohwinkle from About.com gives us four steps to setting financial goals:
Step 1: Identify and write down your financial goals, whether they are saving to send your kids to college, buying a new car, saving for a down payment on a house, going on vacation, paying off credit card debt, or planning for retirement.
Step 2: Break each financial goal down into several short-term (less than 1 year), medium-term (1 to 3 years) and long-term (5 years or more) goals.
Step 3: Educate yourself! Read Money magazine, or a book about investing, or surf the Internet’s investing web sites. The stock market is not voodoo. With a little effort you can learn enough to make educated decisions that will increase your net worth many times over. Then identify small, measurable steps you can take to achieve these goals, and put this action plan to work.
Step 4: Evaluate your progress. Review your progress monthly, quarterly, or at any other interval you feel comfortable with, but at least semi-annually, to determine if your program is working. If you’re not making satisfactory progress on a particular goal, re-evaluate your approach and make changes as necessary.
The first two steps are what I want you to focus on for now. Brainstorm with your spouse or by yourself if you are single, and write down as many goals as you can think of. Then, categorize them into short-term, medium-term, and long-term goals. The short term goals should be ones that help you attain your longer term goals. Your short-term goals should be ones that you can achieve by the end of the year. Your long-term goals are ones that you can think of as your “dream” goals or “visionary” goals. I like to think of them as visionary goals, because a “dream goal” makes it sound like a fantasy. You want to make it a reality!