Basic Financial Goal - a place to start

Having a basic financial goal or objective is a good place to start for those of us trying to pay off debt and get our financial house in order. Goals and objectives are fundamental to any plan, and they help keep us motivated, whether it's day-to-day fugal living or the need to pay off debt.

Are there certain objectives you'd like to achieve? I think we all have them.

The trick is to turn the objectives into reality, not just something on a wish list.

It's important that we have basic financial objectives to keep us inspired and proceeding in the right direction. Any road is acceptable to the person who has no idea where they are going. Be someone who knows where they are going.

Let's look at some basic objectives that one might set, and how we might go about achieving them. Your personal finance objectives will be different than others, but they are important just the same.

The Importance of a Basic Financial Goal

Goals/objectives are important parts of any basic financial plan. Here's what they help you do:

• Have a reason to live and work
• Stay focused on positive outcomes
• Have something to look forward to
• Help measure progress
• Offer reasons to celebrate
• Challenge yourself to achieve
• Confirm that you're on the right path
• Differentiate you from others
• Let you know that you've "arrived"

Basic financial planning requires that you have a basic financial goal.

Example Objectives

Let's look at objectives that we might set for ourselves. Here is a list that starts with the basic and works its way up to the more challenging and complex. See which might be appealing to you.

• taking care of yourself and others
• getting ahead each month
• saving cash for a special occasion
• creating and maintaining an emergency fund
• setting aside cash reserves in case of a job loss
• saving cash for a down payment on a house
• making your money work for you
• living comfortably
• financing an enterprise
• making major investments in the stock market
• becoming debt free
• living off of earnings from investments
• being largely self-sufficient
• retiring early
• becoming largely self-insured
• making a million dollars
• living a life of luxury
• becoming a multi-millionaire

How realistic are these objectives? Perhaps for many, they aren't very realistic. To me, the whole idea of being a millionaire doesn't mean anything. What's a million dollars? It's just more money.

It isn't more happiness.

You should establish objectives that are meaningful to you, and something that you can reasonably achieve. If being a millionaire is what "blows your skirt up" then do it. Otherwise focus on what is important in your life and what can realistically be achieved in light of your skills, interest, experience, training and education.

Realistic and Important Objectives

What should my objectives be? How do I know what's realistic and what's important? Those are good questions, so let's explore that for a moment.

Realistic means that it's not simply a dream, but something that is founded in reality. Things that are realistic are those that you would have "good reason" to believe are achievable by you in your lifetime (with some help if needed).

Important is more subjective, but we can get a grip on it I am sure. Ask yourself these questions to get some ideas going:

What is important for you and your family? How would you want your biography to read? What would be of lasting value in your life? What would you have written on your tombstone? If you had no income and your savings was wiped out, what would be the most important things to have?

Consider the following when trying to establish what is important to you from a basic standpoint:

nourishment -- income -- clothing -- shelter -- health -- safety/security

I'll make a few suggestions for you and see if it helps. Again, starting with the basics and working toward the more difficult. Consider this one large list of objectives, with each portion of the list divided into categories of:

Beginner

• be regularly employed
• have reliable transportation for work
• own your personal transportation free and clear
• have a bank account for savings

Basic

• be free of financial support from others
• pay for safe and comfortable shelter, whether rented or owned
• have nourishing meals each day
• provide utilities like heat, lights and phone
• put $100 in savings each month

Intermediate

• establish a positive track record with credit
• stay current on monthly payments
• be capable of providing the basics for a family
• select a career path
• save for a down payment on a home

Advanced

• contribute up to your employers match in a 401K
• act on opportunities for advancement in your career
• have 6 months of savings to offset a potential job loss
• buy a home
• invest in the stock market
• be debt-free except for the home mortgage

Expert

• fund startup of your own enterprise
• become an investor in an enterprise
• invest in real estate, precious metals or commodities
• pay off the mortgage on your home
• retire early

I've Achieved a Financial Goal, Now What?

Okay, let's say that you've achieved one of more of your objectives and now you're wondering what would be appropriate to do. That's easy. Set up additional objectives to keep you focused on success.

Even if you've reached where you want to be, you have to make certain that you have sufficient income and reserves to maintain that position and address unforeseen situations.

Sometimes people ask me why a multi-millionaire keeps making more money when he or she has plenty to throw around. The answer is easy - that's what they're good at, so that's what they do.

Being a multi-millionaire probably wasn't their financial goal at first, but you can bet that they had many a financial goal in mind throughout their life, and they kept modifying and making new ones as they achieved their objecvtives.

One of the most important objectives for any of us is to have at least a general financial goal or two out there in front of us at all times. It gives us something to shoot for. If we don't have any, we'll be "off target" all our lives.

When you've become adept at achieving financial goals at a basic level, you'll be ready to make more structured plans for success and financial freedom. Take a look at the discussion in cheap living to identify ways of creating a life plan, meaningful goals and criteria for wise spending.

The "cheap living" discussion presents a much more structured approach to financial planning. I have plenty of ideas to offer. They have worked for me, and they can work for you too. Incorporate ideas that you like into your plan for frugal living, and use the plan to work yourself into being debt free and achieving financial freedom.

Having a financial goal or two is wonderful, but expect to work hard at your plan to make your goals a reality.

Done with Financial Goal, take me back to Paying Off Debt