Establishing Financial Goals May Be More Important Than the Financial Plan

For individuals seeking to invest in the stock market, financial advisors always recommend to first become prepared to plan and establish specific needs and goals. In most financial plans, having a financial goal is
almost more important than the financial plan itself. It is the financial goal that puts the drive and motivation into the investment portfolio. So, how does one go about setting a financial goal?

Goal setting is rather simple when broken into a few easy steps. First, the financial investment which leads to the financial goal must be measurable. In other words, it must be an investment that can be tracked and monitored to ensure progress is underway. While investing in the stock market is certainly measurable, there are some financial investments which may not be measurable, resulting in loss of focus or direction in meeting your financial goal. Often, individual investors will place some of their financial wealth into start up businesses for which they are not privy to the information regarding financial progress and failures. This would be an example of a non-measurable financial goal. Investing in a company for which regular financial feedback is not provided on your investment return and success of the operation, would not be a measurable investment.

Beyond measurements of success when setting a financial goal it is important to be specific with regard to the outcome realistically expected. The operative word here is, realistically. Expecting to make $30 million off of a $50 investment is not realistic. In other words, sit down and establish what the financial goal is and be specific as to how you might achieve that financial goal. Who will be your partners? Will the goal be achieved in a particular location or among a specific organization or will this goal be something you work, alone, in the privacy of your home?
As part of the financial goal, once the location and players are identified, it is important to set out a realistic timeline for financial goal achievement. When considering a timeline for completion, also be sure to
incorporate factors which may cause delay or set back attaining a financial goal. By incorporating the most foreseeable constraints, you can better establish a realistic financial goal completion date.

And finally, be sure your financial goal is tangible. A financial goal that can be seen or touched is always a great motivation and driver behind your financial plan. For example, if your goal is to purchase the yacht you always wanted, you will want to expose yourself to yachts on a regular basis so as to keep your motivation and drive in full force. As part of your overall financial goal statement, be sure to state why achieving this goal is important to you and your family. What are the benefits for achieving the financial outcome?

Placing these simple techniques into place will ensure not only a financial goal is established but also a realistic and profitable financial plan accompanies it. When in doubt as to what your financial goal, or financial plan, should be consider engaging a financial mentor; those with whom you can identify a similar pattern in financial goal achievement.