A reader asked; how to set financial goals and achieve them for my future? I simply responded three things. First is knowing the target earning asset for retirement, second is have a investment horizon and third is what to do with his acquired assets. Most readers of Total Investment blog is asking he same question since they know the importance of proper financial planning.
I know this topic is very complicated especially in retirement planning topics but I will try my very best to provide to you the best answer possible. Make sure you consult your financial situations and plans to a Certified Financial Planner.
How to Set Financial Goals and Achieve them?
- Know your net worth
- Get out of debt
- Invest your money
So, we are now talking about financial planning
. A financial planning simply means you have to prepare your financial future. Have a written plan, stick to the plan until you realize your goal. Assuming you are now a 30 year old guy and want to retire at age 50, this simply means you have 20 years preparation to retire rich
Here are the things you should ask yourself when making a financial goal. These are just simply a list as a guide when doing your retirement plan. Just ask yourself the following questions;
What is my Net Worth Today?
You can effectively make a financial goal if you know what you’re worth. To know what you’re worth, you only need to calculate the market value of your assets such as house, car, stocks, cash or real estate
. And then subtract it to total amount of your liabilities. That’s how making a net worth should be done. For further instructions, simply read how to make a net worth statement here.
Image Credit: Alan Cleaver via Flickr CC 2.0
Debt: Get Out of Debt
You should pay all your debts, get out of debt slowly. It is ideal that you must pay your debt immediately before you decide to invest. Ask yourself, when will I become a debt free individual
Before you invest your money, you should have an emergency funds, life insurance and health insurance (as we have discuss again and again). Do not invest your money if you have not yet build your emergency funds
and bought a life insurance and health insurance.
Decide Where to Invest Your Money
Should you invest your money in bonds, savings or stocks? Make sure the investment vehicle can help you get your target earning asset during retirement. Know your target earning asset, invest money per month within a specific period of time.
Ask this yourself? When do you want to become financially free? Remember, a goal must be smart, specific, measurable, attainable, realistic and timely. I hope you liked this tips on how to set financial goals and achieve them. Share it to your friends now.