Establishing Realistic Financial Goals
Setting realistic financial goals is crucial for achieving financial success.
10 things to consider when setting realistic financial goals:
1: Assess current financial situation. Understand your income, expenses, debts, assets, and liabilities. Create a budget to track where money is going and learn ways to evaluate financial wellness.
2: Define short-term, mid-term, and long-term goals. Break down financial goals into short-term (1-2 years), mid-term (3-5 years), and long-term (5+ years) goals. Short-term goals could include creating an emergency fund, paying off credit card debt, etc. Mid-term goals might involve buying a house, starting a business, or saving for higher education. Long-term goals might be retirement planning, wealth accumulation, etc.
3: Be specific and measurable. Set specific and measurable goals. For instance, instead of saying, "I want to save money," specify an amount to save and by when.
4: Prioritize goals. Determine which goals are most important, then prioritize accordingly. This will focus personal efforts and resources more effectively.
5: Select attainable goals. Ensure goals are achievable. . Unrealistic goals can lead to frustration and disappointment. Start with smaller, achievable goals and gradually aim for bigger ones, as more progress is made.
6: Consider time frames. Understand the time it will take to achieve each goal. Some goals may require a longer time horizon due to their size or complexity.
7: Create an action plan. Break down goals into actionable steps. When a goal is to pay off debt, create a plan specifying how much extra can be paid each month.
8: Review and adjust. Regularly review goals and financial progress. Adjust them if necessary, taking into consideration changes in income, expenses, or life circumstances.
9: Seek professional advice. Consult with your installation Personal Financial Manager (PFM). These credentialed professionals can provide guidance tailored to your specific situation and help create a realistic roadmap to achieve goals.
10: Celebrate milestones. Achieve a financial milestone? You will be automatically notified via MOL to complete required training upon reaching personal and professional milestones such as vesting in TSP, deployment, promotion, or marriage. These are called Financial Education Action Points (FEAPs).
While setting ambitious goals is great for motivation, ensuring they are realistic and achievable is crucial for success. Flexibility and adaptability are also important as life circumstances can change, requiring adjustments to your financial goals.
Learn more by connecting with your installation’s Personal Financial Management Program.