Consumer Debt Victoria - PDSC Trustee Site

2014-07-21 21:24:15

Setting Financial Goals

 

Whether you want to be debt free by 2023 or you simply want a holiday to the Caribbean, setting financial goals can help you stick to a budget and get the most out of your money.   So how do you get started?

Step 1: Set your short term goals

Short term goals are important because they can keep you on track when your long term goal seems too far away to provide any real motivation. They also give you more immediate gratification and help you build up you budgeting momentum and confidence.

  • Make a list of short term goals you want to achieve and put them in order of priority
  • Determine a realistic estimated cost for each goal
  • Set a completion date for each goal – some people like to tackle one goal at a time, while others like to put a little into everything, the choice is yours.
  • Come up with a plan – this may involve cutting costs from your budget, such as eating out, or possibly getting a second job. Some of these may seem like sacrifices but reaching your short term goals is easy if you commit.

 

Step 2: Set your long term goals

These are much bigger than a new car or 6 weeks in Thailand. Generally you want to set long term goals that are achievable in 2-5 years, but certain things (like paying off your mortgage or early retirement) can require a longer more permanent lifestyle change. Long term goals are great because they give you a touchstone for every time you have to deny yourself something. They keep you focused and provide motivation. Long term goals are set up much like short term goals

  • Make a list and prioritise it
  • Determine the cost and completion date for each goal
  • Make a plan – unlike short term goals, long term goals tend to be best served if you assign resources to all of them each month, instead of prioritising one over the others.

 

Step 3: Achieve your goals

Take the cost of the goal and divide it by the number of months you have allocated for its completion. This will give you the monthly deposit you need to make to stay on track. It is important to track your progress as it will keep you feeling positive and help you stay on track. Set milestones for yourself and budget for a reward when you reach them. There are many worksheets on line that you can download and fill out, or you can make your own customised progress tracker.