How to choose a financial goal and make it work for you?

We all have goals in life. They can be functional goals for the immediate future, like changing negative habits, taking up a hobby, or learning a new trade skill. They can be goals of a more universal nature that will require more time, such as learning to communicate better or getting involved in the protection of the environment.

One factor that is intrinsic to nearly any one of our goals is money. The way that money influences what we do and how we do it can be categorized as a three step process: securing and  protecting our money, then securing enough to be comfortable, and last, securing more than enough to live the life we might dream of living.

As is often the case, many of us try to reach goal number three, being well off, by skipping one of the first two, if not both, of these steps. This happens from a lack of understanding that while each step is important as evidence of a position in life attained through knowledge and the experience in handling money, one cannot simply jump from one step to another without grasping the purpose of each of these levels as they fit in to an overall financial goal.

Let us look at this in a more detailed way for a better understanding.

1. Wanting to skip ahead to a higher level, especially in financial goals, is common. It really starts when we are young. We finish high school or college, we have a career in mind to pursue, and we join the work force and get busy. We often start off with few assets, but the desire to succeed is strong and youth is itself an asset, full of energy and drive. As we begin to increase our fortunes, we gain more and more experience and understanding, our assets increase, and we start thinking about a home, a family, and retirement pensions.

This tried-and-true method has worked for many people, over many generations, throughout history. This is how most people handle their financial progress, yet so much more could be achieved if they could be more clear about where they eventually want to end up, financially speaking, so that they would better understand more fully what it takes to get there.

2. Some people, having completed their education, decide that they want to forgo the effort of starting a nest egg from scratch by skipping ahead to "living the good life", as they say. Many of the younger set, having met with success for the first time on their financial path, get the urge to dwell in that comfort zone right away and begin to seek sometimes ill-advised ways to maintain the lifestyle, like borrowing heavily or creating credit debt.

This method is very risky, and makes a person vulnerable to the unforeseen circumstances that often occur in life, such as personal misfortunes or drastic changes in the economy. These things can and do happen, and a person will find themselves not only slipping out of their "good life" but falling all the way down past step one into a hole they may never climb out of.

3. Then there are some seemingly "lucky ones" who, due to a natural artistic or athletic talent or because of an uncanny sense of business at an early age, find themselves in the lap of luxury almost overnight, after having developed their skills and talents. While this may seem to be the ideal way to achieve financial success, especially when you are young, there is an inherent danger lurking behind the golden curtain.

Sadly, as often happens, this type of success can disappear just as quickly as it came. This will be disastrous for most because they have no experience in the attainment and the maintenance of wealth through a plan of gradual acquisition, or a step by step method as has been discussed here. Without this knowledge and experience, they will be lost and most likely will never recover, even to a basic sustenance level.

Having a Long Term Goal

That is why planning ahead is so important. If you can develop long-range plans to attain your ultimate financial goals, you will find security in the steps you are taking as you work toward your goal because you will know you have planned it this way. You may stray from the path from time to time, but as long as you never lose sight of your goals and stay focused on your plan you can get where you want to be.

It may be hard when you are starting off in the world to visualize where you will end up despite a plan, and it all depends on your definition of "making it" financially. Long-range plans can sometimes change, and unseen factors can cause plans to change. That is why it is infinitely better to take it one step at a time and to set milestones along the way that, when reached, will give you a chance to evaluate where you have been and how to proceed on the path to financial success.

You should also determine how to manage assets to reach your goals. You can do this by setting three categories for profits.

The first category is determining how much of your profit assets you will use to maintain the comfort level you desire per month, which means saving. You should be able to cover monthly expenses with a little left over for extras.

Secondly, figure just how long you need realistically to achieve your goals. Unless you plan on winning the lottery, you should allow about fifteen to twenty years. This is the most optimal time anyway for starting to grow your nest egg through income and educating yourself in the world of investments. Investing is very helpful, when done properly, but it requires a lot of time, give or take five years, to learn how to invest correctly. Learn about passive income - for example, investing in treasury bonds, real estate for rent, and a pension or IRA - from a professional investment counselor.

Third, analyze as you go. Be adaptable, and be resourceful. Use your accumulated assets, combined with income and any investments you have made, to obtain the financial position you want. You may find that a lofty goal of being wealthy has changed into just making the most of what you have acquired through intelligent money management and wise investing, with less time and labor, giving you all that you need to feel secure and comfortable in the world.