Financial Goals. The Basics & Foundations
The basics and foundations behind financial goals. How to define financial goals, start working towards them and make sure that you are successful in your pursuit.
The Key To Achieving Financial Goals
The secret to achieving financial goals is to have a clear purpose for them. Think about it. When we have a clear reason behind our objective, we usually achieve it. For this reason it is imperative to define our financial goals and think thoroughly about them. You need to do introspection, define what you want out of life– financially/career/business wise– and at what stages you would like these desires to be fulfilled.
define and clarify Purpose
This is what drives you. Why are you motivated? What compels you to action? What are your looking for in life?
Define Financial necessities
Identify what you consider a necessity as a person. There are essential necessities and personal necessities
Define financial and career goals
What do you want to achieve in your career? What do you want to achieve in business?
Establish time horizons
Once you have everything above clear, then it is time to allocate time horizons to your necessities and goals: short term, mid-term, long-term.
Expanding on Financial Necessities
The are two types of financial necessities: essential financial necessities and personal financial necessities. Essential necesities are those that all persons need whereas personal necessities are financial needs curtailed to our individualities. The reason we need to be mindful of our financial necessities is so that then we start understanding the foundations behind our financial goals.
Essential Financial Necessities
Consider these to be the basic needs that as a human you need: a home, water, food, electricity, internet, transportation, etc.
Personal Financial Necessities
These can be thought of as the expanded version your essential needs plus new ones. All depends on what you want as an individual. For example, for a home, do you want a nice and simple home or do you prefer a large and extravagant one?
Defining Career and Financial Goals Explained
Within the broader theme of financial goals, there are two subjects that define it: career goals and business goals. Defininng these and understanding how they are linked will provide even more clarity and grasp for your financial future.
Career Goals:
Business Goals:
Career goals are what you are looking to achieve out of your career. There are many aspects to consider. For example: are you looking for stability or aggressive growth, or a mixture of growth and stability? Is high compensation worth everything (including all of your time) or do you want more work/life balance? Are you looking towards becoming a superstar or are you looking towards performing but also pursuing other interest out of work? Naturally, these aren’t all the possible questions worth considering and you won’t have an answer for all these questions from the start. However, it is great to start thinking about this as soon as possible, so that, in due time, you can get your answers.
Business goals are similar to career goals and can even be considered as an extension of career goals. Basically, business goals are the objectives that you are trying to achieve in the business world (i.e., goals you want to succeed in outside of your day job). These can be grand or they can be none, it is up to you. However, even if you’re a person who is not really interested in business, we would recommend having as a minimum the business goal of having 2 sources of income (day job & some type of income producing asset). This is because we do live in a business world and with the territory come the uncertainties of life, so by having a business goal of a second source of income then you can always have a solid financial footing.
Time Horizons For Financial Goals
Once the previous aspects of financial goals have been defined then the time goals should become clear. There should be at least three time horizons to consider: short-term, mid-term, and long-term.
Short-term
Any goal to be attained within the span of 1- 18 months.
Mid-term
Any goal to be attained within the span of 1.5 – 5 years
Long-term
Any goal to be attained after 5+ years
