Most people have goals in life, whether they are fitness, career or personal achievements. But one of the most important goals, and ones that will benefit you throughout your life, should be your financial goals.
“Setting goals is a way of organising and focusing your attention with a set target in mind. Without goal setting, there is no way to motivate yourself or measure your success, and this is vital when it comes to finances,” says Eunice Sibiya, head of consumer education at FNB.
The first step is to create an action plan for your finances.
“Your action plan must outline the goals that you want to achieve; a deadline alongside each goal as well as guidelines detailing what you will need to do in order to achieve these goals,” says Sibiya.
Deciding on your goal
“Have a meeting with yourself and think seriously about what you want to achieve with your finances,” says Sibiya. “Remember that goals are highly personalised as different people have different ambitions and goals. Life stages also influence your goals setting.”
For example, if you are in your early twenties, your goal may be to save up for a deposit on renting a house or paying off your student loan within a few years. If you are more established you may want to look at buying your first car or your first home.
“There are many goals that you can aspire to. Every person is different, so decide what it is that you want out of life and write that down as a real goal,” says Sibiya.
Creating an achievable strategy
You can, and should, have more than one goal at a time, including short and long term goals.
For example, you may want to travel sometime next year, but your long term goal is to buy your own home. You can’t spend all your energy on your travels and not pay attention to saving towards the house, or ignore your current debt responsibilities.
“Each goal needs a plan to achieve it as these won’t be magically achieved on their own,” says Sibiya.
So you need to create a strategy for each goal, bearing in mind that you need to cover everyday costs and expenses as well as reaching your goals.
Working towards the end goal
The first point of call is establishing how much you need to ultimately achieve each goal.
“If you want to go on holiday at the end of the year and you estimate that it will cost you R10 000 in petrol, accommodation and for all other expenses, you will now need to work towards this using your budget,” says Sibiya. “Assuming there are eight months until the end of the year, that means you will need to save R1250 a month to achieve your goal.”
Each goal will require a piece of your monthly income, so you will need to put it into your budget and plan for this accordingly.
“The best thing about goals is achieving them. Not only will this give you good practice in financial discipline but also help you make bigger goals, such as retiring comfortably or doing something spectacular seem possible,” concludes Sibiya.