Set Financial Goals
The first step toward developing a plan for your money is setting financial goals. Financial goals are specific to what you want to do with your money within a certain time period. You should complete the following steps to setting financial goals:
Step 1: Identify and write down your financial goals
These may include saving for college, buying a car, making a down payment, taking a trip, building an emergency savings fund, or retiring. The goals should be realistic and specific. They should also include a timeframe of when you hope to accomplish the goal. Don’t forget to include the action that you will take to work toward the goal.
Step 2: Organize your financial goals
Break each financial goal down into several short-term (less than 1 year), medium-term (1 to 3 years), and long-term (5 years or more) goals.
Step 3: Identify small steps to work toward these goals
Identify small, measureable steps you can take to achieve these goals and put this action plan to work.
Step 4: Monitor your progress
Evaluate your progress. Review your progress monthly, quarterly, or at any other interval you feel comfortable with, but at least every six months to determine if your program is working. If you are not making satisfactory progress on a particular goal, re-evaluate your approach and make changes as necessary.
Make sure your financial goals are SMART:
For example, perhaps your goal is to purchase a $1,000.00 certificate of deposit (CD) in one year. The CD will serve as part of your emergency savings. You decide to have your bank automatically transfer $38.00 every two weeks into a savings account that you opened to save funds for this goal. You decide to check your balance every three months. This is an example of a SMART financial goal.