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Write down your goals, that’s what you heard a lot. But why? Is there any difference between just imagining what you want to pursue and actually writing them down?
It turns out, yes.
Those who write their goals are more likely to succeed in achieving them. According to Dominican University of California psychology professor Dr. Gail Matthews, those who write down their goals and tell a friend of the updates have a higher chance of being able to fulfill them.
Setting financial goals
In my previous post, I talked about the three characteristics of a financial goal: it needs to mean something to you, has cost and has a deadline. In a financial planning seminar I conducted, I asked participants to write them down. I found out that most of them haven’t thought about their goals, and if they had they hadn’t really spent the time to put them into writing.
We Pinoys think that goals are way larger than our life, and that’s why we don’t think we ‘deserve’ to even have them or much more to record them. Alternatively, we think that it’s enough to carry them around at the back our minds, fearing that we will invite raised eyebrows from other people for even daring to dream.
But to dream is free. And those who give their dreams more focus and attention are in better position in fulfilling them than those who don’t.
Why goals are important to financial planning
Your goals guide your financial plan. Every decision that you make is going to be determined by whether it brings you closer to achieving what you dream of. From organizing your expenses, saving a bit from your income to buying assets, you will always go back to what you want in the first place.
If you don’t verbalize your dream or you don’t have a list of definite plans yet, you are more likely to commit costly mistakes. You will have less reasons to take control of your budget. You are less motivated to set aside savings from what you earn.
And you are more prone to be enticed and to falling prey to get-rich-quick schemes, fly-by-night networking companies and scams.
Other benefits include:
- Provide motivation to do financial planning. There’s a reason why you are taking steps in getting back control of your finances.
- Inspire you to work hard. Without them, you would are subject to quick burn-out.
- Build discipline. Because you are saving up for a your life’s dreams, you will find ways to ensure that your daily living is organized toward fulfilling them. This would include putting a budget in place, determining the amount of savings and making sure that you have adequate income.
Financial goal worksheet
You can use my Financial Goals Worksheet for free! This worksheet is an easy-to-use, Excel-based file that you can download. Just fill it out, and it automatically gives you calculation on how much you need to save annually.
Being clear about the things that you want to buy and do is just the first step, but a crucial one. You would then need to do something so that they will not remain to be dreams, and instead will become a reality.
- Be realistic. While dreaming is free and without limits, it is best to think of the ones that you can realistically fulfill.
- If the worksheet turns out that your dreams are costly, and that it will take you a long time to achieve them, you can do either one of two things. One, you can manage your cashflow by increasing your income and/or decreasing your lifestyle. Two, you can reduce the size of your goal, or remove it from the list which I don’t recommend unless you really have to.
- Talk with your spouse. Communicate with your wife/husband about the goals, especially when they have something to do with your family’s well-being such as purchasing a house, booking for trips abroad and acquiring properties.
- Look for a buddy. Working out what you want in life is best shared with someone who can keep tabs on you. S/He can also encourage you to continue working on your dreams.
If you still need guidance or you have more questions in mind, don’t hesitate to send me a message.