We're halfway through June, and the end of the financial year is fast approaching. That means it's the perfect time to start setting your goals for the new financial year. Here's how to go about doing that so you can enjoy a more prosperous future.
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Review What Worked (And What Didn't)
The process of identifying new goals needs to begin with looking at your goals from the previous year. If you don't have any clear financial goals to check off, then the chances are you don't have a well-defined budget. Make setting that up your key goal, and check out our top 10 tricks for building the perfect budget to get going with that process.
If you've succeeded in meeting your goals, congratulations! That doesn't mean you should just rest on your laurels, however. Your goals form part of a long-term financial plan, and that means they're unlikely to be identical from year to year. Some will continue (saving to your emergency fund), but others may change over time.
Reaching some goals will automatically change your approach: if you've managed to successfully buy your own home, for instance, you'll have switched from saving for a deposit to trying to manage your mortgage payments effectively, and that should be the focus of your goals.
Make Your Goals Specific
The more precise your goals, the better the chance you have of achieving them. Making a vague resolution like "I'm going to save more money this year" or "I want to save for a house deposit" doesn't give you a clearly defined set of priorities. A more specific goal such as "I will save $300 from every pay" or "I will have $20,000 in my house deposit fund in a year's time" gives you something to work toward, and a clear measure for whether you've succeeded.
For financial goals, applying a dollar value is crucial. This is an area where precision counts, so specify your goals in as much detail as possible.
Identify One Specific Target For Immediate Improvement
Setting yourself too many goals at once can be a recipe for failure. It's better to identify one specific goal and work towards that, rather than distracting yourself with too many options. Trying to save for a house and top up your super and plan for an overseas holiday gives you three areas to fail.
That doesn't mean your budget can't take account of all those possibilities, but in terms of goals, it often works better to identify one key area and make that your focus. For many people, that will be saving for a house, though that's becoming more challenging as house prices rise. But whatever it is, having a single major goal makes sense.
Don't Forget To Have Fun
A common mistake when setting financial goals is to be so focused on the end result that you forget you also have to survive the journey. It's important not to waste money, but it's also important not to set yourself up for a life of pointless penury. Make sure that your goals make allowance for the fact that you need to enjoy life as well.
We have a detailed post on how to do that. An important point it raises