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Rich Best has spent 28 years in the financial services industry, as an advisor, a managing partner, directors of training and marketing, and now as a consultant to the industry. Rich has written extensively on a broad range of personal finance topics and is published on several top financial sites. Recent books include The American Family Survival Bible and Annuity Facts Revealed: What You MUST Know Before You Invest.

Having Clear Financial Goals is the Only Path to Financial Independence

Having Clear Financial Goals is the Only Path to Financial Independence

Because the demands of growing a business can be all-consuming for business owners, many tend to delay saving for retirement. With a shorter time horizon to secure their financial futures, business owners cannot afford to stray down the wrong path. Establishing clearly defined financial goals for what you want to achieve along a specific time horizon is the only way to know that you are on the right path.

More significantly, having clearly defined goals helps to give you more clarity in your choices. Any financial decision, large or small, that doesn’t get you further down the path should be discarded. Suddenly, your choices are clear and there is a purpose behind your decisions and actions. There is no financial plan – at least one that you will follow with conviction – without clearly defined goals.

While goal setting is not rocket science, it does require the right mindset. Here are the steps to take to establish and define your goals.

  1. Inventory your needs and wants. Do a brain dump on a sheet of paper of everything you need and want to do financially. Keep your lists for needs and wants separate.
  2. Determine your time horizon. Separate your priorities into short-term and long-term goals. Assign a specific time frame to each. Short-term = 1 to 5 years; Intermediate-term = 5 to 10 years; Long-term = 10+ years
  3. Prioritize. Assign a numerical rating to your list with “1” being most important. On a separate sheet, write down your top three needs, followed by your top three wants. Needs should be prioritized before your wants. Then reprioritize needs and wants to be based on their time horizon, i.e., short-term needs should take priority over long-term wants.
  4. Calculate the cost. Determine how much each need or want would cost if you had to pay for it today.  Then calculate the amount of monthly savings you’ll need to achieve the goal. Any type of online savings calculator will crunch the numbers for you.
  5. Visualize success. If you can visualize it, you can achieve it. The more you emotionalize your goal, the more motivation you’ll have to pursue it.
  6. Create milestones for each goal. Break your goals down into shorter-term milestones with target dates.   When you can achieve, smaller, short-term milestones, you will more likely stay motivated.
  7. Create action plans. Each goal should have its own action plan that includes specific steps to take along a defined timeline. Always include any steps you will need to acquire the knowledge needed to complete the action plan, i.e., investment knowledge
  8. Hold Yourself Accountable. If you have trouble holding yourself accountable (as many people do), work with a trusted financial advisor or form your own board of directors – friends, family, mentors – who want to see you succeed.

With clearly defined goals, you will have more clarity in your financial decisions and you will be able to develop sound investment strategies that target your goals, propelling you on the path to financial independence.


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