In this article, we will discuss on financial goals. How should we set financial goals? Are they just numbers? Should we just put in whatever numbers that we like?
Financial goals
As the name suggests, financial goals have to do with your finances, meaning dealing with money. There are specific formulae to calculate the numbers to put as financial goals, depending on the objectives. However, numbers are just numbers, they are just tools to an end. So, the goals should be linked to specific areas of your life, so that they will improve your life.
I classify financial goals into three general categories, namely fundamental, growth, and legacy. They can be further divided into short-term, medium-term, and long-term goals.
Fundamental
The fundamental goals are those related to day-to-day business or for protection. These goals may include setting up emergency fund, debt management, and risk management. These goals will help to create a buffer, offer protection to your assets/life, and/or reduce your liabilities. One example of foundation goal is setting up an emergency fund of RM 1,000.
Growth
The growth goals are concerned with growing your wealth or net worth. They are related to investment and retirement. An example is investing RM 500 per month in the stock market.
Legacy
Legacy goals are related to the handling of your assets after your demise. This is the area of estate planning and involves the use of some instruments such as will or trust. An example is donating RM 100,000 to charity after your passing.
Setting financial goals
The first step in setting meaningful financial goals is to look beyond the numbers. It is not just about saving a certain amount, earning a specific income, reaching a particular net worth or having a certain amount in your retirement account.
It is about what that amount enables you to do – pursuing hobbies, spending time with loved ones, travelling, or simply enjoying the peace of financial security. Think about the life you want to lead and how your financial goals can facilitate that life.
The goals should reflect your values too. Do not blindly chase after what someone else has before determining if you really want the thing, especially material stuffs. Keeping up with the Joneses will only lead you on an insatiable path.
Setting meaningful financial goals requires long-term vision. But it does not mean sacrificing everything now for future enjoyment. It is about finding a balance. Thus, your financial goals should include short-term goals that bring immediate joy and long-term goals that guarantee your future well-being.
Lastly, the goals should be SMART – Specific, Measurable, Attainable, Realistic, and Time-based. By meeting these conditions, your goals would not be too vague (such as I want to be rich) that have no end point. You would not know objectively if you have achieved it. On the other hand, by setting SMART financial goals (such as I want to save RM 10,000 by the end of 2024), you would definitely know your progress and whether you have achieved your goals at the end of the deadline.
Conclusion
Setting financial goals is not simply plucking numbers out of thin air. Your financial goals should improve your life and those around you if possible. Otherwise, you will just become a slave to the numbers. Think about how your financial decisions can align with your life’s purpose and how each choice can contribute to a rich, fulfilling life. The goals should not just be about numbers, but about what those numbers will enable you to do, to experience, and to share.
How can a financial planner help you?
To help you to set your financial goals, I will elicit some information and your preference before suggesting the financial goals. However, you are the one who is going to call the shots I am not not living your life. You should select goals that resonate with you and would bring positive changes in your life.
After setting your financial goals, I will devise a plan to achieve the goals. We will review the plan and tweak the plan as necessary. Even if the plan is perfect, it would not work if you do not implement it. So, you should let me know your thoughts clearly and select a plan that you would implement wholeheartedly.
If you really cannot follow the plan, do not worry and let me know as soon as possible. I will come up with alternatives. Nonetheless, if you always fail to adhere to the plan, perhaps the plan needs to be overhauled. I will help you with this.
If you are interested in working with me to improve your finances, just leave your details here. I will reach out to you and see if we would be a good fit for each other.
Disclaimer: This post is for informational purpose only. You should use judgment and conduct due diligence before taking any action or implementing any plan suggested or recommended in this article.
