No matter what stage of life you may currently be in, setting financial goals is imperative. A Harvard Business Study conducted in the late 1970s, revealed that only 3 percent of the students in its MBA program had put pen to paper to write down their goals and a concrete plan. Ten years later, that same small segment of students who wrote down their goals were earning ten times as much as the remaining 97 percent of their class. While there are debates regarding the legitimacy of this study, the outcome highlights an undisputable fact: setting well-defined, written goals is critical to accomplishing them.
Setting goals as they relate to your finances is the first step in achieving financial health and security. Identifying and thinking through both short-term and long-term financial goals will play a tremendous role in dictating your financial future. The following are some of the most important reasons to set financial goals:
- Developing a realistic plan. Taking action to define your financial goals will outline where you are now compared to where you would like to be. Having a monetary value aligned with a retirement goal will set the groundwork for how to get there.
- Forcing yourself to prioritize. Are you determined to be charitable in retirement? Has it always been your goal to put your grandchildren through college? Do you want to take multiple annual vacations in retirement? These are excellent goals, but most people cannot afford to do it all. Setting financial goals will force your hand in prioritizing what is most important to you.
- Quantifying your goals. Placing an estimated number on the goals you wish to accomplish is essential to understanding what you will need in savings and investments to realize them.
- Measuring your progress. Few better motivators exist than the feeling of reaching a goal. Creating strategic, specific financial goals and tracking progress on them will keep you disciplined to stay on course.
- Adjusting your strategy based on your financial goals. Once you have defined goals, you are better able to cultivate an exact plan to get there. Financial planning experts will be better equipped to look at investment plans based on those financial goals.
- Staying accountable. Specific goals allow for you to stay on track with attaining them. Vague goals like “try to save more for my retirement” are easy to evade, but specific financial goals will keep your eye on the prize.
- Celebrating financial milestones. Crafting a set of financial goals gives you the opportunity to celebrate once you achieve them. In doing so, you are continually pushing to achieve that next financial milestone.
There is no particular age or financial situation that is not suited for financial planning. The ability to set clear, specific financial goals will serve as a guiding light in your journey through retirement.
At Baron Silver Stevens Financial Advisors, our retirement planning, wealth management, and financial planning team is here to help you determine financial goals that make sense for you and your family. Contact our financial planning office in Boca Raton today to learn more about your financial future!