Tag Archives: goal setting

Starting To Work On Your Success pt. 3

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Goal Setting 3

 

In the previous column, I asked you to compute how much your present lifestyle costs you. We are now on the second and third questions of eight questions you need to ask yourself to help you set your financial goals.

 

2) If you want your lifestyle to improve, how much more improvement do you want?

 

Since we are planning for many years ahead, it is normal that you want a better lifestyle.  This means that you will be spending more for the better lifestyle.  You have to write the kind of improvement you want in terms of your budget.  Knowing what you are already spending today in your present lifestyle, you can have an estimate of how much you have to be spending also today if you have the lifestyle that you want.

 

You will probably wonder and think that in the coming years, the cost of what you buy today will be so much more so why am I asking you to compute in today’s cost.  You are correct and you should consider that factor which is called inflation when we go into the actual preparation of your financial plan.  We will do that later but it is good enough to know how much you would need today for the improved lifestyle that you want.

 

 

  • How much risk can you take?

 

Taking risks with your savings is dependent on your personal orientation as well as your age and the kind of investments you already have.  The general principle is that nobody can be correct one hundred percent of the time.  Everybody makes mistakes.  Therefore, it is very possible that you may choose some wrong investments.  The key is to be able to rise and learn from failure and in effect, turn the failure as a success. And you can always rise from any kind of failure.  Unfortunately however, when it comes to money or business failure, it is only possible to recover if you still have time and energy left.

 

If you are young, you can take more risk because you have the time and energy. However, just because you are young does not mean that you should only invest in risky businesses.  You still have to balance your investments so that if some fail, you will have the chance to recover faster. As they say, never put your eggs in one basket.

 

As you grow more wealth and gain more experience, you can invest in higher risk opportunities only if you can really afford to lose your investment completely.  This means that you have enough investments that, if you lose the risky investment, you can still meet your financial goals. It is almost like gambling.  When you gamble, you know that you can lose that amount completely.

 

Remember, THE HIGHER THE RETURNS, THE HIGHER THE RISKS.  It is easy to be attracted to high returns especially when so many friends and relatives tell you stories about how much money they have made.  So, study your risk options well.

 

Starting To Work On Your Success pt. 2

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Goal Setting 2

 

In the last article we started to talk about the need to set personal financial goals or objectives.  Before, making your plan, here are some tips on what you should be ready to do:

 

1)    You have to put it in writing!  There is a study that shows that people who succeed write their plans.  You must have a written plan for each goal.

 

2)    You can have different goals but you must state it in positive terms.  It is not enough to say that you want to save or that you want to cut expenses.  You have to know what it is that you are saving for and specify each goal in terms of amounts.

 

3)    You must have a specific timetable for each goal.  If you have a timetable, you will not procrastinate because you know when you have to reach it.  At the same time, you will realize how realistic your goals are based on your timetable.

 

4)    You have to be ready to monitor your progress.

 

Now and in the coming columns, I will present you eight questions that you need to ask yourself to be able to set your financial goals:

 

1)  What level of lifestyle do you want?

 

Each person has a dream of the kind of lifestyle he wants.   What is meant by lifestyle?  Lifestyle is the standard of living.  This is usually defined in terms of the expenses needed daily/monthly/yearly.  The higher the standard, the higher the expense.

 

The highest standard is that of the “rich and famous” normally equated to being in the society pages of the newspapers, driving around in expensive cars, having a big house, regular travel, hosting big parties regularly etc. However, you will be surprised that sometimes these people are actually not as rich as they are portrayed to be.  Many of them are deep in debt that if they suddenly die, their heirs might be left with so many problems instead of inheritance.

 

Many people will say that they just want lots of money to spend without any idea of what they want to do with it.  If they don’t know what they want to spend for, any amount of money can very quickly disappear.  What is important is that you have a good idea of how much you would like to spend every day/ every month/ every year that will make you comfortable.

 

You can start with your present lifestyle.  You know how much you spend regularly.  If you are regularly in credit card or other kinds of debt, you can estimate how much more income you really need over what you are actually receiving, to maintain your present lifestyle.  If you are unable to earn that additional income, you have to downgrade your present lifestyle or go to the next question next week.

Protect Your Greatest Asset

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Here’s an article from our Managing Director, Guita Gopalan, about getting financial protection for your greatest asset!

Protect your greatest asset – YOU. You are your greatest wealth generator.

Now just a reminder, a REALLY REALLY IMPORTANT REMINDER! All your hard work in investing can be washed away if your don’t have financial protection. Major emergencies and unforeseen situations befall everyone at least once in their life. And then you have the many minor emergencies. Sometimes we get so used to managing them that our life becomes a series of things to ‘damage control’ and our finances never take off towards the wealth goal.

Major emergencies – hospitalization, operation, calamity, job dismissal, loss of life, disability, etc. – often require a significant amount of money to be able to address adequately. If you don’t have financial protection and all you have are investments then you may find yourself in a position where your investments are doing badly and because of an emergency you’ll have to get your investments…You lose out on what you could have or should have earned. Or your investments could be doing really well but you’ll be trading in your intended financial goal to meet the emergency requirement. The good news is that both situations can be avoided simply by having enough financial protection.

Want to read more? Click here!