Saturday, November 04, 2006

Why do we need a clear financial goal?

One of the reasons why we mess up our finance is we don't exactly know what we want. Do you know exactly what you want? In other words, we do not have a clear financial goal. Without clear financial goal, you will be dissatisfied with where your life is going and how you're using your financial resources’.

I bet 99% of us will have a common goal which we would like to call, "I want to make a lot of money". Well, that is a very rough goal but not specify enough. Your financial goal must be specify. The first question, you may want to ask yourself is how much money I make is enough? The clear financial goal should be something like this: "I have 2 million net worth at the age of 40". Simple? That is long term goal and you have to break it down to short term goals (e.g. investment strategy) to support it.

Without clear financial goal, you are aimlessly in life. Yes, we might have some money in bank but get killed slowly by inflation. Even if you do invest, you will be invest without direction which also a major reasons why many of us mess up with our finance such as listening to the wrong advice, relying on unsuitable advisor, attracted by the advertisement and many many more. That is why it comes to the importance of financial planning.

Goal setting is essential for anyone who wants to succeed in life as what have been explained by he Stephen R. Covey's habit 2 "Begin with the End in Mind" in his book, The 7 Habits of Highly Effective People. If you do not have financial goal now, find a quiet place, think of what do you want to achieve in your finance? It is ok to change and review your financial goal in future. In fact, your financial goal should be reviewed from time to time. The most importantly, define your own financial goal first if you do not have it now and use it to help you to make your major financial decision.


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