Setting Financial goals

It’s the new year and you have great plans for the upcoming year and one of those plans is to improve you financial freedom. But where do you start?

1.The first place to start is where you have come from. Review last year by looking at your income and expenditure for the year.

·        Income  - what did you and your spouse/partner earn last year after tax

·        Loans – what are you repaying in loans and mortgages. What term is left, what is the interest rate and how much interest did you pay

·        Expenditure – What are you spending your money on? Breaking down you expenses so that you know what you spent on heating, food, motor expenses, electricity etc.

·        Savings  - how much money have you saved

·        Pension – Do you have a pension? If so what is it worth and how is it performing

·        Protections – What insurance,life assurance and income protection to you have in place. Is it enough or too little and what is it costing

This can be done on excel or if you could use Xero which will automate a lot of the income and expenditure and will allow you to compare each year to see improvements.

2. Once you have looked at where you have come from you now need to put yourself into the future to see where you want to get to. If you were reading this article in 12 months time what needs to have happened for you to be happy with your finances?

·        Do you want to clear your credit card?

·        Do you want more saving?

·        Do you want to move house?

·        Do you want more spending money?

·        Do you want to go on a great holiday?

When setting this goal you need to be SMART:

1. SPECIFIC: A specific goal tells you exactly     what you want to accomplish,
       which makes taking action     easier and achieving it highly probable. You must
       answer the five “W”     questions: Who? What? Where? When? Why?
       That last question, Why, is     an important one. This is about your motivation
       or purpose, as well as about     the benefits it will provide. A powerful “why” can
       leads to another, which     leads to another.
2. MEASURABLE: Establish concrete criteria for     measuring progress on your
       goal. When you can measure,     you stay on track with target dates, which
       also spur you on. Ask: How     much? How many? How will I know when it’s
       accomplished?
3. ACHIEVABLE: Identify your most important     goals, and you’ll figure out ways
       to make them happen! Move     forward on them and they become more and
       more attainable, not because     they shrink, but because you grow to match
       them.
4. RELEVANT: To be realistic, it must be a     goal you’re both willing and able
       to work toward—you believe     it can be done! A goal can be big and realistic
       because it’s highly     motivating. Be sure that every goal represents substantial
       progress.
5. TIME-BASED: A goal needs to be grounded in a     time frame or there’s no
       sense of urgency. The very     act of setting deadlines along the way sets your
       unconscious mind into     motion. “Someday” won’t work; “two weeks from
       today” will!

You now know where you want to be in 12 months’ time now it is a matter of looking at the next 90 day and what needs to happen. You would do a similar strategy for the next 90 days maybe not as in depth.

So if you want to get rid of your credit card debt then over the next 90 days it could be a matter of having a goal of 25% of the debt cleared

Now you have the plan for the 90 days goal is the one thing you can do this month to set you up for success?

What is the one thing you can to this week?

What is the one thing you can do today?

Rather than looking at a large goal and not knowing where to start, just break it down it small steps and every day make small progress to getting where you want. You will be surprised how the momentum will build once you get moving.

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