Here we are nearing the end of the year, and already talking about setting up the financial goals for 2023. (Yes, can’t believe it either!) No matter how smooth n’ yay or oops n’ okay 2022’s been for you, financially, right now is a good time to pause –to reflect and plan a little for 2023.
Firstly, “why?” right?
Financial goal planning isn’t always the answer, but with it comes to finances it sure is the best way forward. When you enter a time phase, or let’s break it down – when you start a day, if you just dive right in you’ll find yourself meeting unprecedented situations, having less time to think through and eventually ending up spending more/ hastily.
Instead of that, imagine having a rough (or as solid as it can be!) idea of your needs and wants, what you wish to work towards or would like to achieve (financially). With this in place, you’ll likely be conscious of your everyday financial behaviour and will also be better prepared for any uncertain event or emergency. Remember, every small financial decision made or not, is contributing to an un/wanted outcome.
Looking back at the recent years, we collectively met a global ‘emergency situation’ – the pandemic. It hit everyone’s financial situation and planning. Businesses, and industries recovering from its impact. One of the biggest learnings out of this? Plan for unforeseen future.
So in short, financial planning and having financial goals set up is a rather must if you’re aiming to be money-wise (or wise in general). Overall you’ll be able to understand your past behaviours, the mistakes you made, what you’d like to do differently hereon, how to go about it and a lot more.
Now that we have mentally agreed that setting these goals might just do, it’s time to get on it, and so comes the “how?” – Financial goals are personal and subjective, and mostly stem out of/take into consideration one’s situation, preferences, priorities and more. There’s no set goal because work for one would work for others, neither is there a set template. But there sure are a few things that are essential to keep in mind while we arrive (or get started) at our list of financial goals for the upcoming year. And that’s exactly what’s ahead of you in this read, so dive straight.
How to set your financial goals for 2023
- Get Real with the Reality
- Picture the Tomorrow
- Segment – Short Term and Long Term
- A SMART move
- Keep track and an Eye
- Keep in thought – the Unexpected
- Take the lifeline: Expert Advice
- Over and Out the Overwhelm
Get Real with the Reality
The start or the first step towards setting up the financial goals is extremely crucial. With finances, the very basic place to begin is the now and here, and you are required to be extremely honest and objective. Evaluate your present and current scenario, answer the questions of ‘where you stand’ and ‘what you have’. Once you do that, recognize your needs, what’s lacking, and also what’s pitch perfect. By this you’ll land funnelling at what needs work and what must stay intact.
Picture the Tomorrow (Important for financial goals)
Once you know where you are, time to hop onto where to get. Start from the bigger picture and work backwards. Identify the big areas – could be saving for higher studies or being financially independent, begin investing, taking a solo vacation or even buying the incoming model of your fav gadget and; then wonder what you should do to get there. All these will be your goals.
Segment – Short Term and Long Term Financial Goals
Now that you have with yourself a bunch of goals, go through each and segment or categorise them into Long Term and Short Term.
As the name makes clear, short term goals are the ones aimed to be achieved in a shorter period of time, say a couple of months or a year or two. On the other hand, Long Term Goals are the ones that are to be accomplished a bunch of years down the line. While we do recognize these as two separate segments, they are often intertwined. Because what are long term goals if not a summation of a couple of short term goals? So once you’re done listing the long term ones, further break them down and sub-categorize them into shorter ones.
A SMART move
When it comes to finances, the word smart is more than it’s very meaning. It’s actually an acronym for Specific, Measurable. Attainable, Relevant and Time-bound. It’s nothing but a checklist for goals, as in you must make sure you set SMART goals.
Specific: Let each of your goals be as specific as it can be, bring in as much clarity as possible. Further, break down each goal into clear specific steps. This helps us to perceive the mountain-big goals as doable and additionally, gives us a clear vision of the action we must take.
Measurable: Management pioneer, Peter Drucker believed “You can’t improve what you can’t measure.” It is essential to always always define your goals in a way that is measurable as this is the only way you can recognize any growth or address any issue.
Attainable: when picturing a tomorrow, it’s easy to get carried away or clouded by big dreams. While we don’t discourage big dreams (dreams should in fact be big, always!), it is important to keep the goals real and attainable, especially at that specific point of time. The steps that follow these goals too must be actionable. This will keep the disappointment, that was bound to come, at bay and keep the self motivated.
Relevant: The goals you set must always be aligned with you, your life, and your needs and dreams. Keeping them so brings your most motivated self and because they are so personal, you’re able to naturally focus on them better.
Time-Bound: For something to be measurable, it is essential to have a time frame or a finishing line. This not only ensures you stay strongly focused and procrastinate less due to the healthy pressure of the deadline but also prevents wastage of time and efforts in cases where corrections are needed.
Keep track and an Eye on Your Financial Activities
Next in the process comes actually following and following up. Goals are all talks unless you get on them, actually and consistently put in the work and regularly follow up with the progress and your pace. Financial goals are not ones that can be achieved overnight, it requires consistent thought and effort throughout. Like you won’t be able to magically say save at the end of a certain month if you keep spending recklessly every alternate day. So keep an eye on your financial behaviour and spending habits while you’re set to achieve any goal, as you simultaneously keep track of how you’re progressing and if you’re meeting the mark.
Keep in thought – the Unexpected
Here’s one constant about life: it’s unpredictable. You can’t in any way foresee what will come or happen. While this is an out-of-hands situation, what is in your hands is the way you brace yourself to withstand these unexpected turns and events.
Emergency Fund: It’s a reserve that’s kept aside for any unforeseen, unpleasant situations. Emergency Funds act as a safety net, protecting you from life’s curve balls and providing support in helping you achieve the set as it prevents you from going off-track from your plans in cases of undesired financial situations.
Hence, with your other goals, always have an emergency fund. A general thumb rule that’s followed is having roughly 3 to 6 months’ worth of expenses kept covered or 3 to 6 months’ income kept aside.
Take the lifeline: Expert Advice
If you’re rather new to getting your finances in order and are taking baby steps, things can seem quite like a mess. Even if you’ve deep in the game for long, certain foreign situations can still have you standing at crossroads or absolutely clueless. In both of these situations, all you gotta do is approach the experts.
There’s tons and tons of literature on the umbrella topic of financing. A little digging in, educating yourself, and getting hold of the fundamentals can without a doubt equip you to tackle n’ turn around any and every situation.
Over and Out the Overwhelm
Standing in front of this long to-do list, not knowing where to begin from and with an overload of information/advices/opinions from different sides, all when it comes to a crucial topic/matter such as finances where even the smallest mistakes can equal big losses, can surely and does leave many under the weights of overwhelm. But that’s the one big step on the ladder you need to climb over. It may seem too much or tough, but once you stop letting overwhelm intimidate you, what lies ahead is only a journey of learnings and successes.
2023 is almost here, less in fact; while this could sound as too little of a time to figure out finances for the forthcoming year but it is a great time span, or opportunity as we’d like to term it, to set goals, plan and absolutely nail your finances the coming year. And if you have made it to here – to the end of this read, you’re already ready to get started!