However small or great, financial goals challenge us in ways that other goals rarely do. Saving for a goal inevitably involves some element of delayed gratification – where you would have to forego spending now in order to save up for a greater future purpose. There could also be more than one goal on the horizon, which that makes it much more difficult.

Regardless of the type of goal, it would remain only a dream unless practical steps are taken.

Define the financial goal

Defining the goal will help determine a set of processes and milestones to achieve the goal within a set timeline. It is important that you are specific about the goal. Monitoring the goal would be difficult to achieve if the goal is vague (such as ‘I want to make more money’). Also, you may not recognise that you have actually achieved the goal when you do. Be realistic and ensure that you begin with smaller, near term goals, which can give momentum to help you achieve larger goals in the long run.

There are several types of goals:

a)      Short–term goals: these have a time-frame of less than a year and can be the initial steps to a long-term goal.

b)      Medium-term goals: with a time-frame of between 1 – 5 years, these might include larger items of a few thousand dollars. These might include such items as white-goods and trips overseas.

c)      Long-term goals: time-frame of more than 5 years. These goals can be identified by significant lifestyle changes with financial goals of tens to hundreds of thousands of dollars (depending on your financial background).

      Quantify the financial goal

Quantifying your goals will greatly assist in creating your action plan. This means finding out exactly how much money you need, and budgeting for that. For example, if you are paying off a loan, then this could mean finding out the current amount left in the loan, the repayment amount and the interest rate you are paying. Using a computer programme such as Microsoft Excel could be useful to layout this information.

      Timeframe to reach the financial goal

Setting deadlines is important. Meeting deadlines is even more important as it creates confidence and momentum for the next stages towards the goal. For example, to achieve your goal of repaying your loan earlier, you would need to calculate the amount required. This would help determine the new timeframe to achieve the goal.

      Monitor your progress towards the financial goal

Goals are generally difficult to attain unless you monitor the progress along the way. With the busy lifestyles we lead, we can be led astray from meeting our milestones. We can also be forced to take short cuts, such as falling short of the goal in the hope of catching up at a later stage.

      Celebrate your success

While achieving your financial goals can be a serious business, it is important that you celebrate reaching milestones as you continue on your journey. An affordable purchase or a night out with friends can bring positive energy into achieving the next phases of the goal. Accordingly, it is important that you set aside money for such fun events. Spending money for entertainment and leisure activities can be helpful rather than detrimental. Setting aside regular savings in a hidden account can slowly build up over time.