January 29th, 2009 
Vijaianand In my last post, we saw how Goal Setting works better than Resolutions. I also promised to show, how Goal Setting Techniques works better in achieveing your financial dream. Let’s start with a quick check on your stand with money and move on setting some new goals, draft realistic plans and try to reach them by taking some action to make this year a fruitful one. Self assess yourself by answering these 3 questions below and figure out where you are in regard to financial planning. Say “YES” if you have an answer or NO if you don’t have an answer or don’t know anything about the question. Do you any personal financial goal like buying a new car or home? If you said “Yes” to all of these questions, you are really way ahead of many people. If you said “No” to all them, its better you start thinking about them, now as it’s the right time. Allot a specific time. Sit down with a pen and paper or your computer. Start listing your goals, dividing them into three categories: short term, medium term, and long term. • Short-term goals might include buying a new computer, or paying off credit card debt. • Medium-term goals could be purchasing a car or going back to school. • Long-term goals might be to buy a home, saving for your kids education or retire with enough money to live comfortably. At the end, make sure you prioritize the list. Which ones are the most important to you? Which ones can wait? Define a Plan The goal is to buy a home in 3 years with 20% down payment. That’s a SMART goal but to get you there you better draft a sound plan. In this case, you need to know things like:
Do you have a Budget in place to track all your income and expenses?
Do you have a Savings Plans to grow your money?
Set/Revisit your Goals
When comes to selecting and Setting goals, Try to set SMART goals. These are goals that are Specific, Measurable, Achievable, Relevant, and Trackable. For example, you may want to create an emergency fund in six months to have 3-6 months worth of your salary. 
People don’t plan to fail, they usually fail to plan. If you want to go to a place, you better know your directions, otherwise you are sure to get lost. It is as simple as that. Similarly, if you have set your goals, you better work on a clear and concise plan to reach them. Let’s define a plan by taking a simple goal.
Start out Amount: If you have $10,000 saved in a money market account, you may decide to allocate half of it to the down payment. In this case, you would write $5,000 under Current Assets.
Gap: Indicate the gap between the cost of each goal and the assets you have allocated, in our example $15,000.
Number of Years to Target Date: Enter the number of years between now and your target date, which is 3 years.
Amount to Be Saved Each Year: Divide the difference by the number of years to the target date. That amount you need to save each year to reach your goal is $5,000 a year.
Coming up with $5,000 for a year might be a tough deal. Try to split it monthly. You can then start a savings plan to save around $420 per month to get to $5,000 a year. The next and important step in the financial planning is executing the plan.
Ready, Set and Go: Take Action Making up goals and plans is just 20% of the challenge; executing them is 80%. In our example, you have the goal and plan to be ready to buy a house in 3 years with a 20% down payment. How are you going to implement the plan if your financial situation is already tight? The first step is to analyze your current income and expenses to see where your money is going and what can you scale back. Start a simple budget to track your income and expenses, going after expenses which can be easily cut without affecting your lifestyle to achieve your monthly savings goal. Open a savings account or an add-on CD to put away a fixed amount every month. Or setup an automatic debit from your checking account to this savings account. This way you don’t have to do it manually. Finally stick to the plan rain or shine and you are sure to reap its rewards.
“Wisdom is knowing what to do next; virtue is doing it,” said David Starr Jordan.
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