We all want to start saving money, whether we are students,
employees, retirees or a couple who have just given birth. Our goals differ
from one person to another, but what we may share is not knowing how to start
that journey, as thinking about saving may be easy, but developing an
appropriate plan for those goals is what can be difficult at times.
Do not worry, in this article we will talk about steps and tips
that will help you succeed in your journey.
● How do
you plan your financial goals?
● How do
you prioritize these goals?
● How do
your budgets divide your money?
● How do
you adjust your goals to your needs?
First: List a draft of the goals you want to achieve
When you sit down and start making a list of all the things you
want to achieve with your money, chances are that your list will be longer than
you expect. That's why it's worth taking the time to write down each goal, you
never know, you might remember something important!
Some of your goals could be as simple as saving up for holiday
gifts, they could be as important as getting married or buying a car, or they
could be as important as emergency home repairs or (God forbid) surgery.
Whatever comes to your mind, put it on the list.
At this stage, you must collect the information you need, for
example the amount you need to save to achieve your goals. Will it cost you
hundreds of riyals or thousands? Do you need a month? Years? Decade? You have
to set a time period and a material amount for each goal separately.
Second: Prioritize your goals
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After thinking about what you want to achieve, you can then start
formulating ambitious financial goals that are achievable in an intelligent
way. Or what is also known as SMART goals; The SMART goals model is known in
the business environment, when setting goals for companies, initiatives and
projects - and we can adapt this model even to our personal goals. SMART goals
adhere to these criteria:
Specific clear
Measurable
Actionable achievable
Relevant is related to you
Time bound is associated with a time frame
Below we will explain how to formulate your goals the smart way:
Clear Goal
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Your financial goals belong to you and only you. It is not about
what people around you expect. Prioritize your goals, whatever they are,
according to their importance to you only; Start by setting the most obvious
goals, and we'll turn that goal into a SMART goal,
Measurable Goal
In order to ensure that you achieve your goals, you must make them
measurable. The measurable goals are linked to a specific number, this number
may be a monthly amount that you save, or the final value of that goal, such as
the amount of the car purchase advance; Now back to our previous example, and
we'll put a measurable number for it:
Achievable Goal
An achievable goal is one that you can achieve because it is
realistic. You have to think about how to determine the monthly amounts to
achieve this goal, review your consumption expenses to see where they can be
reduced. Maybe you could cook at home two more days a week instead of eating
out at restaurants and put the surplus you saved to pay down your debt instead.
Make sure you set goals that seem challenging but are achievable to add how
you can achieve that goal.
We'll go back to the
previous example and make it realizable in the following way:
A Target Related To You
It is essential that your goals are consistent with your financial
situation and investment goals, as it is unreasonable to set a goal to buy a
luxury car while you do not yet own a home, or to try to save money in an
unorganized manner (without relying on investment budgets or portfolios).
Setting priorities, thinking about the context, and your ability to identify
the appropriate relevant resources and their interdependence with the financial
situation in which you live are among the most important elements of smart
financial goals. Now let's take our example and make it relevant to your
financial situation:
Target With A Time Frame
It is also essential to commit to achieving your goals within a
reasonable time frame and to follow various methods that allow you to stick to
a schedule. This standard from the SMART Goals framework is intended to help
you avoid overstaying your goals. Give your goals a target date to achieve
them, or a time frame to stick to based on your current sources of income.
To make our example bound to a time frame, we'll add a specific
date for achieving our goal:
Third: Divide your budget according to your list of goals
After you have determined the amount of money and the time period
that you need, and arranged your priorities, you must now know what you can
actually achieve. Calculate how much you need to save each month to reach each
goal, using the amount and the time period you set. It is okay for it to be
beyond your financial capacity.
Arranging the numbers in a list and placing them in order in front
of you helps you ask yourself questions such as:
“Will I be able to achieve all of these goals within the time frame
specified for this goal?”
"Would I be willing to delay one goal in order to reach the
other goals?"
If you are planning to invest to achieve one of your goals, you
should also consider the amount expected to be earned to achieve these goals
through your investment account.
In a previous article, we talked about how to set flexible and
appropriate budgets for your income through Mala'a application
How To Plan Your Budget Simply?
Fourth: Make your financial goals work automatically
Making your goals work automatically is the best way to achieve
them. So it's best not to make the mistake of pausing your goals.
Setting auto deduction helps you achieve your goals faster and
easier, as it makes it easier for you to set a budget for each goal, and auto
deduction helps you not to forget a month, for example. This strategy is often
called "pay yourself first", because you put your money into the
things that are your highest priority before you spend it on anything
Abstract (Butter 🧈)
Some of your goals may be as simple as saving for a new phone, and
they may be as important as getting married or buying a car. It is essential
that your goals match your financial situation and investment goals; It is also
essential to commit to achieving your goals within a reasonable time frame;
Remember that prioritizing your goals doesn't mean you can't achieve lower
priority goals. For example, you do not have to be afraid of paying off debts
and investing at the same time. The SMART goals model is known in the business
environment to set goals for companies or initiatives and projects. You can
adapt it even to your personal goals. Be sure to set goals that seem difficult
but achievable to add how you can achieve them.