An essential part of everyday life and responsibilities is personal financial planning. This may involve both budgeting and saving. To budget and save successfully, it is likely that you will need to set yourself financial goals. Whilst everybody dreams of a goal of reaching a millionaires bank balance, it is important that you are realistic in your financial goals or else you are just setting yourself up for failure. Here are a few tips on how to set yourself realistic financial goals that you will succeed in meeting.
Know your situation
Firstly, to enable you to set yourself these goals, it is vital that you are fully aware of your financial situation. This will involve you knowing your exact income and expenditure for each month. This is easy to do simply by listing all the different sources of income that you have in your household, such as wages or any benefits that you receive, and then list all your bills and financial commitments for each month. This will give you some idea of the goals that you need to set.
Know what you want to achieve
The goals that you set will depend on what you want to achieve in life in general and may consist of both short term and long term goals. An example of a short term goal is saving up for a holiday with your family and a long term goal may be to pay enough into a pension scheme to ensure long term financial security once you have retired.
In the case of short-term financial goals such as saving for something specific, you can use your list of income and expenditure to help you to set a realistic goal in accordance with the amount of income that you have left over after meeting all of your financial commitments each month. You will also need to consider the time scale in which you want to meet your goal when setting it. If, with the amount of money you are able to set aside, you are not able to reach your goal within the required timescale, you either need to set a more realistic timescale to achieve your goals or look at which you can either increase your income or reduce your expenditure to allow you to save more.
In the case of setting realistic long-term financial goals, it is wise to seek the advice of a professional, such as a financial planner or adviser or your bank manager. They will help you to look at financial matters such as long term savings or investments, mortgage repayments and pension schemes. They will look in detail at what you can realistically achieve with the finances that you have available and advise you on appropriate actions that you will need to take to achieve your goals.