Over the past few weeks, I’ve been telling you that I wanted to focus more on the true mission of the blog, which is to transform your personal finances. Therefore, I want to explain to you how to optimize the management of your personal finances.
Initially, there is a semantic question since in the expression “financial planning”, there is obviously the word plan.
And if you manage to do the planning (in any field where you do it), you will be in control of your financial situation and you will not leave anything to chance.
Know that by taking care of your personal finances, you will ensure that you:
- stay informed and educated about the world of money;
- understand the different impacts of your financial decisions;
- improve your quality of life;
- not depend on any government to keep you afloat.
How to optimize the management of your finances with objectives
With your finances, if you want to have fun in such a serious field, you must first set yourself goals.
You need to know where you want to go and more importantly, how to get there.
Therefore, make your list of financial goals and differentiate between your goals and your wishes .
what is the difference between both?
It’s actually fairly easy!
If what you want is vague enough and you can’t establish a time or period to achieve the goal in question, well that’s not a goal.
Here are examples of goals that are vague:
- I want to get rich;
- at retirement, my financial security will be affected;
- my children will not have student debt.
On the other hand, here are beautiful objectives that are clear:
- at 55, I want a net worth of 10 million;
- my children’s RESP will provide them with $50,000 to finance their studies;
- when I turn 60, my house will be paid off.
Do you see the difference?
For you to be able to optimize the management of your finances, your financial objectives must have a “monetary” component with a figure and a timetable and a period of time to achieve it.
Therefore, the first step in establishing your financial plan is to create your list of goals.
To do this, draw up a list of your short, medium and long-term desires and transform them into real and measurable objectives (precise amount + deadline).
The benefits of setting goals for your finances
Your success in goal setting is practically a science!
The advantage of doing this is that if you set your goals in a clear, measurable and achievable way, your chances of success will increase tenfold.
Indeed, science has shown that your brain will more quickly integrate your financial ambitions if they are fixed in advance.
It’s going to be easier for you to get there than to throw away your desires without taking those actions too seriously.
In addition, you will be able to develop your action plan to precisely achieve your objectives. Without a plan, your chances of success will be very slim.
What you need to understand in setting your goals is that often, and unfortunately, achieving them comes at the expense of something else.
So, by seriously planning your action plan, you will avoid potential negative consequences.