A goal is best defined as something you aspire to or wish to do.
It also refers to the object toward which an endeavour is directed; an end.
Financial goals are savings, investment, or spending targets you hope to achieve over a set period of time. The stage of life you are in usually determines what type of goals you wish to achieve.
Identify your goals
Financial goals are the long-term, short-term and intermediate goals that form the basis of a holistic financial plan. The best financial goals align with one’s values and personal objectives. These plans may include putting children through school, going for a vacation, maintaining a particular retirement lifestyle, or paying off and staying out of debt.
Jane Busaka, an accountant in a non-governmental organisation, together with five of her friends decided to form a travel chama group at the start of the year in which they would each contribute and save Ksh.10, 000 each month to enable them to travel to Dubai in December for vacation.
“At some point in life, we all need a break from the busy nature of life just to go and relax and unwind somewhere peaceful. Together with my friends, we came up with a plan that would see us raise enough money by the end of the year to go for our dream vacation in Dubai. That meant that we had to come up with a financial plan that would ensure that we achieved our goal and so far we are happy with the progress. We can’t wait for that moment to come so that we go and enjoy ourselves,” says Busaka.
According to Busaka, they appointed a treasurer amongst them who keeps a record of the money saved up each month and ensures that it is safe in a bank account.
How to set your financial goals
To be able to set appropriate financial goals, it is good to:
- Identify your WHY
Ask why you want to achieve the goal. Answering the WHY allows you to be able to stick to achieving your financial goals.
Then you need to set a specific financial goal. What is it you want to achieve? How long will it take? What are the steps to achieving it?
“Once you have identified what is important to you, you need to figure out what is achievable in the short, mid-range, and long term; develop a SMART(Specific, Measurable, Achievable, Relevant and Timely) strategy and a tight budget to achieve it; start saving and constantly monitor your success,” says Sheila Mmboga, a financial literacy expert.
- Give your money a “job”
The next step is to give your money a “job”.
“Think about your days at work. You have things you need to accomplish this week and things you hope to finish in the future. The same is true with financial goals. What kind of life do you want now? Later? That is your money’s job to help you achieve,” she adds.
- Be flexible with your goals
One thing to remember is that financial goals don’t have to be cast in stone. In fact, you will revise them throughout your life.
- Categorise each financial goal
It is also important to categorise each financial goal as short, mid, or long term.
The below guide can help identify and categorise your goals;
- Short-term financial goals: six months to five years.
- Mid-term financial goals: five to 10 years
- Long-term financial goals: more than 10 years
At the end of it all, it is important to know how much you have versus what you still need to save.
Sources: YoungMogul, annuity, yourdictionary, principal, investopedia, thebalance