SAVING PLAN LESSON 1 The first month of 2014 is almost over and I see you still have the fresh memories of your New Year resolutions. Percentage wise you should be you should be approaching the 8% mark in these resolutions. If not maybe there is a disconnect between the resolutions/goals and planning. Planning and for that matter proper planning is the sure way of ensuring the probability of achieving these goals is high. When you plan remember it’s like going to a place that you already know and the way to follow is the laid down plan. Here are a few tips when doing your financial planning since you are not yet late. 1. STATE YOUR GOAL-SHOULD BE SMARTER AS USUAL S.M.A.R.T.E.R. Goals Goals can be powerful motivators for individuals and organizations, if done right. If done poorly, however, they can have an opposite effect, i.e., lowering motivation and desire for improvement. To be done right, goals must be SMARTER (Specific, Measurable, Achievable, Realistic, Time bound, Evaluate, and Re-Do). Specific goals are precise and clear, rather than overly broad or ambiguous. They answer questions like: who is involved, what do I want to accomplish, where must this be done, when should it be performed. For example, “Join a health club and workout 3 days per week,” versus, “Get in shape.” Measurable goals are quantifiable: in other words, you can establish concrete criteria for measuring your progress toward the attainment of each goal you set. Be able to answer questions such as: how much, how many, how will I know when it is accomplished? Achievable/Attainable goals meet the common sense test that they require a change in current practices or behavior to be achievable. You figure out ways to accomplish your goals by developing the attitudes, abilities, skills and financial capacity to reach them. Realistic goals represent objectives toward which you are both willing and able to work. A goal can be both high and realistic, you must decide for yourself. The test for “Realistic” is a careful study of the past to know what is a “stretch” goal and what is wildly and unreasonably optimistic. You must truly believe that it can be accomplished. Time bound goals have an end point that can be found on a calendar. Time frames tied to your goals provide a sense of urgency to help motivate you. Evaluate goals regularly and adjust them as needed to account for changes in family or job responsibilities or availability of resources. Re-Do goals after the evaluation process and iteratively go through the SMARTER process. 2. KNOW THE COST OF YOUR GOAL To know how much you will spend in getting your goal done you may follow the following steps 1. Look for expert advises in the specific goal areas 2. Ask people who have achieved these goals 3. Do window shopping if it’s something you can get from the shops 3. STATE THE TIME YOU WISH TO ACCOMPLISH THE SET GOAL The time will be dependent of several factors which you need to consider 1. Cash flow 2. Your daily expenditure 3. Your income source 4. Seasons in your income sources 4. The fourth thing you need to know is how much to set aside in order to achieve the set goal in the time frame set Amount to set aside =cost of the goal/the time to achieve the goal It’s my hope this article will help in shaping up the resolutions as you forge a head. Example. 1 goal- Good bed 2. Cost of bed and Mattress- Ksh. 10,000 3. Time to get the bed -1 year 4. Amount to set aside (Save) = 10,000/1yr=10,000/12m=10,000/12*30days =Ksh. 27 and when you convert to per hour by dividing with 24 hrs. In a day Next time we will look at the advantages of having a saving plan for your goals =Ksh. 1.20 every hour
Posted on: Sun, 26 Jan 2014 09:43:42 +0000
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