Personal financial goals refer to those objectives you set for yourself as regards the inflow and outflow of money, to ensure financial security. Have you ever felt restricted to achieve a significant milestone or purchase something essential, all because your income needs to stretch further?
If your answer is yes, then it’s high time to start setting personal financial goals for yourself. Have you ever wondered why some people succeed in surpassing their personal financial goals while other people struggle? Well, it all boils down to how well they manage their financial goals.
While our responsibilities may vary, the ability to effectively manage our personal financial goals is not limited to those with fewer obligations. Even though it may require varying periods for different individuals, financial security is attainable for anyone willing to manage their personal financial goals.
Thus, in this guide, we’ll be looking at 8 effective ways to set and manage your financial goals.
Table of Contents
George Doran’s SMART Concept of Goals Management
George T. Doran introduced the concept of SMART management of goals, a widely accepted framework for evaluating well-crafted goals. To effectively manage your personal financial goals, it is essential to incorporate the essence of SMART goals.
Let’s explore each aspect of SMART goals:
- S for Specific: Your personal financial goals need to be specific and clear. They should outline precisely what you aim to achieve, why it matters to you, and who will be involved in the process. For instance, instead of setting a vague goal like “future plans,” it would be more reasonable to set a specific financial goal for your MSc tuition fees. This specificity helps you establish a concrete monetary target to work towards.
- M for Measurable: It’s crucial to make your personal financial goals measurable. That is, setting a quantifiable target rather than a general notion. For example, rather than saving “some money,” aim to save a specific amount like #100,000.
- A for Achievable: Although some call it action-oriented, it still explains the same thing. They all aim at considering what is obtainable. You cannot aim at saving #100,000 monthly if your monthly income is also #100,000. You have to be realistic in the way you set your personal financial goals.
- R for Relevance: This means relevance in managing your personal financial goals. Having a strong reason that aligns with your vision and motivates you to be consistent and eagerly pursue your goals. It’s not just any reason, but one that truly matters and inspires you to take action.
- T for Time Frame: This involves setting a specific period for achieving your personal financial goals. Goals can be categorized as short-term, mid-term, or long-term. Have you ever wondered why those goals you intended to achieve “someday” haven’t materialized? It’s because “someday” lacks accountability and fails to provide motivation. By establishing a time frame, you take responsibility and can effectively plan within that designated period.
Read also: 5 Tips to Stay Consistent with Your Goals
8 Effective Ways to Set and Manage Your Personal Financial Goals
You don’t need the service of a professional financial advisor before you effectively manage your financial goals. We understand that not everyone can afford such services. That’s why we have provided readily accessible resources like this guide to assist you.
The following methods will guide you in effortlessly setting and managing your personal financial goals:
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List out your goals
Just as you write down a problem statement, list out your personal financial goals. This step allows you to thoroughly understand what you’re working towards.
Additionally, prioritize your financial goals if you have a list of multiple objectives. This helps you focus and allocate resources effectively.
Read also: Simple Tips You Need to Chase Your Dreams
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Set a timeframe for goals
Remember the importance of the last letter in SMART goals, “time frame.” Specify the duration you want to work with, whether it’s short, mid, or long-term. It’s helpful to set an exact date as a deadline.
If your goal isn’t time-bound, you can establish a time frame based on your budget. Having a defined time frame keeps you motivated, consistent, and focused on reaching your personal financial goals.
Track expenses
It’s crucial to comprehend and assess your spending habits to effectively manage your personal financial goals. Determine where your money is being allocated and identify any patterns or habits that consume a significant portion of your funds.
This analysis enables you to recognize unnecessary expenses and take measures to reduce them. By doing so, you can allocate your resources more wisely and align your spending with your financial objectives.
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Create a budget
When setting personal financial goals, it’s vital to devise a plan for allocating your income towards your expense priorities, including savings and any outstanding debts. Budgeting allows you to assess how much you can allocate to each expense category based on your income.
This process helps you determine the timeframe required to achieve your set goals and figure out if adjustments such as reducing expenses or taking on a side hustle, are necessary. By creating a clear budgeting plan, you gain control over your finances and pave the way toward achieving your desired financial outcomes.
Pay off debts
If you have any outstanding debts or financial obligations, it’s essential to create a repayment plan as part of your budget. Whether it’s an electricity bill or a school loan, divide the amount owed into manageable monthly instalments.
This approach enables you to make gradual progress without feeling overwhelmed. By consistently paying off your debts, you’ll feel motivated and empowered to work towards managing your personal financial goals with a renewed sense of determination.
Save for emergencies
To ensure you’re prepared for unexpected expenses, make sure to include emergency savings in your budget. You can set aside three to six months’ worth of income within a year.
Consider supplementing your savings through a side income or by setting up an automatic debit from your account into a dedicated savings account. Emergency savings provide you with financial security and the freedom to pursue your personal financial goals with confidence.
Read also: The Best Ways to Set Achievable Goals
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Get a side income
To successfully manage your financial goals, consider boosting your income. While spending habits can be a challenge for some, others may find that their current income is insufficient.
Explore additional sources of revenue, such as investments, part-time work if feasible, or monetizing your skills and talents. By diversifying your income streams, you can increase your financial stability and enhance your ability to achieve your goals.
Ensure your goals are SMART
Ensure your financial goals align with the principles of SMART goals. Make them specific and clear, leaving no room for ambiguity. Ensure they are measurable, quantifiable, and can be tracked using concrete figures rather than abstract concepts.
Set goals that are achievable and realistic, taking into account your current circumstances and resources. Make sure they are relevant to your unique situation and aspirations. Lastly, establish a timeframe or deadline for achieving your goals, creating a sense of urgency and focus.
By adhering to the SMART goals framework, you set yourself up for success in managing and attaining your financial objectives.
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Conclusion
In a world where financial security is paramount, setting and managing your personal financial goals is crucial. By understanding the principles of SMART goals and implementing practical strategies like prioritizing, budgeting, tracking expenses, and diversifying income, you can gain control over your finances and work towards a prosperous future.
Edited by Priscilla Ajayi.
About Author
- Oyinade Afe is a versatile writer, designer, and filmmaker with a passion for telling stories. With more than 3 years of experience in content writing, she excels in crafting compelling narratives, visually stunning designs, and producing engaging films. Oyinade is dedicated to authenticity, creativity, and inspiring others through her work.
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