How to set realistic and achievable financial goals
If you want to make progress with your money and put your plans into motion, set some financial goals.
It can be exciting to think about making big purchases such as buying a home, a new car or planning a destination vacation. But dreaming is just not enough. If you want to bring the vision for your financial future to life, you have to map out a plan that will make it happen, and that includes setting financial goals.
Your financial goals are a to-do list that will help you identify your priorities and figure out what is achievable in the short, mid and long-term.
Setting financial goals can seem overwhelming, especially with so many financial aspirations and a tight budget. There are, however, a few pointers you can follow when setting your financial goals.
List and prioritise your financial goals
Start by writing down your goals and list them from the most to the least important. In your list, include those you are already working on and those you haven’t started on yet. Write down details about each goal like the exact amount of money needed, the timeline, and how much you have already saved up. This will help you understand what is needed to meet that goal and build a plan around it.
Also, remember that it is possible to save for more than one goal at a time by mixing short-term and long-term goals. For example, you can save for a weekend away with friends while saving for retirement.
Vague goals are difficult to plan for. You might say “I want to go back to school”, but what does that mean? Narrow it down to which school? When do you want to start? How much is the school fees? How long you will be in school? Are there other associated costs like exam fees?
Have a deadline or a time frame within which you need to have accomplished the goal(s). Also, organise your goals into short, mid and long-term ones. A short-term goal is like building an emergency fund, a mid-term goal is saving up to go to university and a long-term goal is saving for retirement or your child’s education.
Make your goals measurable
Figure out the exact amount you want to save and break it down into smaller chunks. This way you’ll know if it’s a goal that you’ll hit or not. Smaller amounts make the goal more achievable. For example, if you have a debt of KShs 100,000, calculate how much you can pay off monthly instead of trying to pay off the whole amount, that way you won’t feel defeated even before you start.
Have realistic goals
Ask yourself if the goal is achievable. Goals can be challenging so don’t set yourself up for failure by setting impossible goals. Weigh your goal against your current financial situation. This way, you can tell if your salary and budget allow you to save up for that Samsung Smart Bespoke French-door fridge you want by the end of the year.
Use financial tools
Give yourself a deadline
It’s easy to let your goals fall off by the wayside and start procrastinating especially if they are long-term, and not time sensitive like paying your rent every month. To hit your goals, your deadlines need to have a reasonable timeline. For example, if you want to clear your KSh100, 000 debt by the end of the year, you need to pay KSh8,333 every month without fail.
Revisit your goals regularly
Once you have set up your goals and identified them clearly, keep in mind that things change, life changes, and things like inflation, recession and pandemics do occur. It is therefore important to review your financial goals and take note of your progress and priorities and adjust accordingly.