There is a quote from an anonymous author that says, "Goals are as important to success as air is in life." This statement is particularly relevant to financial success and how it relates to financial goals. The way to succeed financially is often to set and achieve personal finance goals.
The problem is when most people hear or read the words 'personal finance', their eyes glaze over, and they immediately start thinking of something more interesting ... like what is the function of their keyboard's scroll lock button? But the reality is that it's really easy to learn how to make the most of your finances, and that just a little bit of attention can go a long way.
Where are you financially?
It's hard to get somewhere if you don't know where you are in the first place. And with personal finance, setting financial goals for the future is just as difficult if you don't know where your finances are at the moment.
The best way to measure your financial status is to find out your personal net worth. Personal net worth is basically your personal finance bottom line. Having taken into account all your assets and liabilities, what you end up with is considered your personal net worth.
The four types of personal finance goals
When you find out your personal net worth, ideas for goals will begin to develop, write some of these down on a piece of paper and then refer to them later when you are in goal. There are four classifications for financial goals - the deadline you set to reach the goal determines what kind of goal it is.
Short-term personal finance goals
These goals typically take less than a year to accomplish. These goals are usually extremely important as many of your bigger goals depend on your success with these short-term goals. These goals are also important because they build morale and boost your financial confidence - suddenly the bigger goals don't seem so impossible. Short-term goals can include reading a finance book, starting to track your finances with personal finance software, or even paying off a credit card.
Mid-term personal finance goals
These goals should take less than five years to achieve. These goals can be related to your short-term goals (ie a short-term goal may be to pay your Visa card and a mid-term goal is to have all your credit cards paid). Mid-term goals as well as your larger goals need to be closely tracked, as deferral can often make personal financial goals very difficult in the medium term.
Mid-term, long-term personal finance goals
These goals should take anywhere from five to 15 years to reach. There are people who have become totally debt free from undergoing a midterm. These goals are sometimes developed or changed completely depending on life's priorities.
Long-term personal finance goals
Long-term personal finance goals can take sixteen years to reach a lifetime. These are goals that deal with your retirement and leave a legacy for your children. Many people set long-term personal finance goals to have a personal net worth of 'X' dollars at a certain age. Long-term goals change and evolve as people grow and their priorities in life change. You need to review and evaluate your long-term financial goals at least once a year - maybe when you do your taxes.
Reward yourself for accomplishing financial goals - smaller goals can be associated with lower prices, while accomplishing bigger goals can be rewarded with a family vacation.
When talking about family, involve your spouse and children (if applicable) in your financial goals. They will provide motivation and some financial goals will involve the entire family's help to achieve.
Prosperity with personal finances
Prosperity is a word defined by the person using it. One person may not consider themselves prosperous until they reach millionaire status, while another person may thrive because they are giving their family a single home that is fully paid for.
While setting financial goals, it's a good idea to take some time to think about what you want in life - what will make you prosperous. Once this is determined, set goals that help you achieve prosperity - good luck.
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