While it’s imperative for nonprofit organizations and small businesses to set reasonable financial goals, it’s also important for individuals to remain in good financial health. Flyer Consulting recommends setting financial goals to maintain this financial health. Upon reading the 5 tips below, individuals will know how to set a good financial goal and how to make progress toward that goal.
1. Categorize your financial goals as short, mid, and long term. Different financial goals will have different time frames, so it is important to allow for flexible periods to meet these goals. A helpful guide is to categorize short-term financial goals as those to be met within six months to five years. Mid-term financial goals are those that can be met in five to ten years. Long-term financial goals are those that are longer than ten years, and are commonly associated with life goals such as building a retirement account.
2. Prioritize your financial goals in categories of critical, need, or want. Everyone will have basic critical life and money goals, such as buying a car, building a savings account, paying down debt, and buying a home. By prioritizing your goals and physically separating them on paper or on a spreadsheet, it can be easier to visualize what goals need to be met first. Other financial goals may include financially planning to raise a family, paying college expenses, and possibly leaving an inheritance.
3. Examine your situation. As you begin to set your goals, take a step back and look at what kind of goals you can set that will realistically be achievable. Assess your financial position by looking at your current income, tax situation, and net worth. From here, you can begin to set up goals like creating a budget, building an emergency fund, paying off debt, and saving for retirement.
4. Make sure your goals are SMART; specific, measurable, achievable, realistic, and time-bound. Whether you set one goal or many goals, it is important to make them realistic and achievable. You want to be able to map out how long your goals will take and pinpoint how close you are to completing them.
5. Treat yourself. It should not feel like a chore as you are working towards your financial goals. Make sure to reward yourself as you continue to make progress reaching your goals. After completing a goal, whether it was a long or short-term goal, reward yourself by briefly shifting your focus to more exciting goals, like saving up to buy a want like a new laptop or car.
Trevor Casmere and Connor Ilyavi