Your financial goals should be the product of your convictions, and will always be adjusted to your principles, values and priorities.

One of the first difficulties when organizing personal finances has to do precisely with setting financial goals; that is, the destination to which we are going. There are no good or bad goals; you also can’t pretend to set your financial goals by copying those that other people have imposed for themselves, far from it; financial goals vary according to your attitude, your needs, your heritage and your current financial situation.

First, before you get to work on establishing your goals, keep in mind that any goal must be expressed in numbers or percentages. If you think your goal is to have enough money saved to pay for unexpected expenses of your home and vehicle, you are not really saying anything; what is “enough” for you? How will you know if you’re getting close to the goal you set if you can not see your evolution? You should rather say: I’ll save 15% of my income as of the month of January 2016. As you can see you must not only concentrate on your desire, but also quantify what you want.

A second aspect to keep in mind is that goals are the expression of a balance between ambition and realism. It’s useless to establish poorly ambitious or easily achievable goals (eg, reduce weekly coffee spending, knowing that that’s what it costs a modest breakfast of churros with chocolate) Similarly, it is not useful to set unrealistic or difficult to reach goals (eg, to reduce by 80% the monthly utility bill for next month). In the first case, if the goal is very easy to accomplish, there would be no reason to change financial habits that contribute to achieving the medium and long term plans. In the opposite case, if you set very hard or hardly achievable goals, you will feel frustrated at not being able to reach them and in the end, dismiss the possibility of establishing new guidelines to put your finances in order. You may already have noticed that goals should involve some additional effort; In other words, your goals should require you to maintain some discipline and rigor in your daily action; therefore, that’s why you should avoid goals imposed by other people. Keep in mind that your financial goals should be the product of your conviction and consequently adjusted to your principles, values and priorities.

A third element to consider when setting your financial goals is that they can not be contradictory; all of them form part of a gearing that lets you achieve the welfare state you want. If you set a financial goal like this: save 30% of my monthly salary, and another defined in terms of: allocate 80% of my salary to reduce the outstanding balance of my credit card, which one are you going to fulfill?. Obviously both contradict each other, and at least one of them is not doable.

Finally, formulate your goals in the short, medium and long term. Don’t put them all in the same boat. For a financial objective of higher order, as might be the case: ensure financial freedom after retirement, you can set a short term goal, for example: Hiring a pension plan before the end of the fist half of 2016. You can also set a goal to medium term that contributes to achieve the same goal: for example: Acquire within the next three years, a house on the beach to rent it; and finally: A long-term goal might be: To reach retirement age without mortgage commitments and maintaining ownership of the two houses.

As you can see, setting goals is a dynamic process that requires constant review and adjustment, but the faster and at an earlier age you begin to establish your long-term goals, much better; for example, can you imagine that you start planning today how to earn income after your retirement, if you think that will happen next year? It would not make much sense, right?