How To Define Your Financial Goals

For many people, thinking about the future can be stressful; how to save for a house, how to take a trip with your partner, how to pay for the education of your children, how to have a safety mattress for retirement… because when reflecting on this, the problem of not knowing where to start arises.

Having a financial goal is always a good way to start. However, on many occasions, you don’t know how to approach it. Doing it wrong can also be counterproductive, causing you to give up on it in the end. For this reason, to avoid that your projects are abandoned, in this post we will talk about how you should start:

For a financial goal to be effective and achievable it must be a SMART goal. But what is a SMART goal?

SMART is the acronym for Specific, Measurable, Actionable, Relevant and Timely, qualities that the objectives must have in order to have a greater probability of achieving them.

Specific — The objective must be specific enough to measure and check its progress. An example would be that instead of saying “I want to travel”, it is better to ask what trips you want to make and what your budget would be, that is, it is important to have financial planning.

Measurable — The target must be measurable. You cannot measure the abstract, therefore, instead of saying “I want to be rich” it is better to have a specific monetary objective.

Actionable / Achievable — To achieve the objective you have to be practical, and take steps little by little, reducing expenses, saving money, investing… When setting a goal and how to achieve it, it is important to be realistic. It is not necessary to set goals that from the beginning seem very distant, but it is better to impose intermediate, simpler purposes and that as they are achieved, the final objective is reached.

Relevant — It is vital that your goal is important to you, that it is relevant. This point is especially remarkable because if your goal has personal value, you are more likely to persevere to achieve it than if you are indifferent.

Time — A goal needs to be subject to a time limit, as it can be postponed, abandoned, and forgotten if you don’t have a deadline.

Prioritize the Goals

Once your goals are established, it’s time to locate them on your priority list. Although it would be great to fulfill them all easily and without problems, being realistic sometimes is not possible and you have to change them and accept some commitments.

At this point, it becomes critical to differentiate what are needs versus what are wants in order to organize finances. Some examples of things that should be prioritized would be:

Cover your Basic Needs — The human being needs food and shelter to survive, so it is always our first priority. Fortunately, most families live above their basic needs, allowing them to invest resources for their financial goals.

Settle your Debts — Paying debts is usually our second priority. However, it is not bad to keep some debts if you invest at the same time. We explain: If the interest on the debt is high, it is advisable to pay it off as soon as possible. However, if the interest is low and through investment, we can obtain a percentage of at least 1.4 times higher than the debt, then it is recommended that you keep it while you invest.

Have a Retirement Fund — It is always good to have a retirement mattress, so we recommend that you save a part of your income to create it. We not only advise you to save it but also invest it. Investing them will be the only way that your savings will not lose value due to the effect of inflation.

Other Financial Objectives — Lastly, with less priority than the previous ones, there would be other financial objectives about things that you want to buy or do (travel, cars).

So, once you know these points, you can create a long-term financial plan that helps you achieve your goals. However, achieving this can be uphill if you don’t have a financial advisor to help you. And you could easily find finance consultants and advisors online with the help of Adeion.com. As an expert network, they offer expert investment managers with access to top industry professionals that you can trust to start your risk-free investments.

An advisor will help you to set out your objectives in the best way, and to organize the best way to achieve them.