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Dreams will remain dreams unless action is taken towards achieving them. Having financial goals, provides the direction to plan personal finances towards those goals and to measure the performance of achieving them.
Goals should be SMART: Specific, Measurable, Achievable, Realistic and Timely.
Areas to set goals:
- To protect against financial risk
- To protect against living too long
- To pay for raising children and their education
- To save for a specific purpose
- To support retirement
- To pass on wealth
- To minimize taxes
- To be financial independent and achieve financial freedom
Each of the financial goals can be grouped into short, medium and long term goals. Each will also need to be assigned a monetary value using the time value computation and the time frame for its accomplishment. Read more...