Setting financial goals is a skill. Believe it or not, it can be done incorrectly. To most, this is surprising news, since we tend to think about goals as things we want, and it takes no skill to simply want something.
Goal-setting is part of establishing a budget, so you want to know you’re doing it right. What makes for good financial goals? How do you know whether you’re on the right track?
Before deciding whether your goals are “good,” you should know the difference between wishes and goals. There’s nothing wrong with wanting something, but hopes and dreams are not goals. Desires are just that – desires. Without a plan behind them, they will always be abstract. A goal is born when a plan is established to achieve it.
Good Goal, Bad Goal
Healthy financial goals are the ones that will do 2 things:
A hot new sports coupe may be a cool dream – and it may even become a planned goal once you have a road map to achieve it. But will it benefit you to have that shiny toy if other bills are not being paid on time? Is it healthy?
Examples of Good Financial Goals in Context
The answer lies in context. For some, the example of the neat car isn’t a bad goal, and can even boost earning potential. For others though, the hot rod that loses value quickly without offering any returns to its owner can be a financial catastrophe. Here are some generally healthy goals to consider.
Score a Goal
Earlier we mentioned that a dream becomes a goal once it has a plan in place. A plan includes 5 elements and can easily be remembered by the acronym SMART:
Once all 5 elements of your plan are put on paper, you can start taking steps to achieve your goal. This is a thrilling time, as the novelty of hard work and sacrifice has not yet worn off. Enjoy it, and keep your road map handy. Surprises (even ones you didn’t write down) will come up, and you may get off-track temporarily, but with your plan written down, you can refer to it again and again to find your way back on track.
To turn a dream into a goal, start with a plan. If you’re overwhelmed and don’t know where to start, phone a non-profit credit counselor to help you wrap your mind around what kind of healthy goals are attainable for you at this stage of your life.
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Consumer Education Services, Inc. (CESI) is a non-profit service provider of comprehensive personal financial education and solutions for all life stages and for all of life’s milestones. Our goal is enhanced economic security for everyone we serve.
CESI is NOT A LOAN COMPANY