Achieving Household Financial Goals

Tips for Families to Accomplish Monetary Objectives

Aug 5, 2009 Wei Yin Wong

Write down monetary goals, prioritize the goals, start saving and investing early to set and achieve smart financial goals.

The road to financial security and freedom is a bumpy one. There are often big setbacks and challenges to tackle. A very effective way to achieve this is by setting short- and long-term financial goals. Here are some tips that families can use to realize their monetary objectives.

Write Down Monetary Goals

Don’t just try to remember them. Put the financial goals down in writing to cement them in the head. Couples should do this exercise together. To get started, put together a list of things that would make the family feel happy and financially secure. Examples include buying a nice house, reducing family debt, going for overseas holiday, paying for children’s education and retiring comfortably.

Prioritize Financial Goals

Once there is a list, work out which goals are the most important for the family. However, be ready for clashes between even worthwhile goals, say Anton Nadilo and Andrew Lendnal, co-authors of Budget Wise, Dollar Rich [Exisle Publishing, 2006]. “Paying for a child’s braces may take money that would otherwise go toward their education. Choosing among expenses like this can be agonizing. That’s why to get what you want you must first decide which goals will take precedence,” they write.

Start Saving and Investing Early

The power of compounding works well in meeting long-term monetary objectives as it allows even a small amount of money wisely invested over a long period of time to grow into a huge sum. However, to make the most of it, it’s important to start early. So make every effort to set aside a certain amount of money each month for savings and investments as soon as possible. For Australian families, investments in superannuation plans are good financial strategies.

Create Specific, Measurable, Acceptable and Realistic Goal within Time Frame

Nadilo and Lendnal also suggest creating what they term as “SMART” goals – specific, measurable, acceptable, realistic goals within a time frame. Here’s a closer look at "SMART" goals.

• Specific. A specific goal is one that can be clearly stated in one or two sentences. For example: To save a 20% deposit for the family’s first home.
• Measurable. For a goal to be effective, it must be measurable. More detailed goals are often more likely to be measurable. For example: Monthly savings of $500 to repay credit card debt of $2000.
• Acceptable. An acceptable goal is one that fit with the family values and one that all in the family really want.
• Realistic. A goal has to be realistic to be achievable. There’s no point in dreaming of owning a $3 million mansion in 2 years when the family has an annual net income of $24,000!
• Time frame. A time frame in a goal helps put the plan in place to achieve it. For example: To plan for a wedding costing $15000 with monthly savings of $250 within 60 months.

To take control of family finances, set and indentify household financial goals. This can be done by writing down monetary objectives, prioritizing and choosing the goals carefully, saving and investing early to build wealth through compounding as well as creating goals that are specific, measurable, acceptable and realistic in a given period of time.

Found this article useful? Read also How to be Financially Secure, Growing Household Wealth through Discipline and Understanding Household Financial Matters.

The copyright of the article Achieving Household Financial Goals in Family Finances is owned by Wei Yin Wong. Permission to republish Achieving Household Financial Goals in print or online must be granted by the author in writing.

Write Down Financial Goals Like Buying a House

Start Saving and Investing Early