This was originally published on Monday, December 30, 2013, in the Pacific Daily News. Click here to subscribe to the PDN.
As 2013 is coming to an end, take some time to review your journey this past year — including your personal finances.
Are you managing your money to accomplish your individual financial happiness? Personal financial planning allows you to control your financial situation to meet specific needs and goals. By reviewing your personal financial goals, you can develop a financial New Year’s resolution.
• Goals: What would you like to be able to do tomorrow and how will your money help you get there?
Short-term goals are saving for a vacation, paying down credit cards or other small debts that can be attained within the next year.
Goals such as paying off credit cards or school loans, or saving to buy a house are goals that take one to five years to accomplish and are intermediate goals.
Long-term goals involve more than five years to achieve. Retirement and paying for a college education for your children fall under this time frame.
All these plans work in coordination with each other, and the success of one goal leads to the success of the other.
For example, saving for a home is an intermediate goal, which is the foundation of being a homeowner — a long-term goal.
Not all goals are ongoing. Some can be annual such as saving for the holidays or vacation, and others reoccur even less often, such as saving for a car.
• Goal setting: Set goals that are attainable and not too far out of reach, as that will only frustrate you as time goes by and you are consistently failing to meet your goals.
Goal setting is important in that it is a great way to plan, implement and measure your progress. Your goals should be specific. I came across a good way to set and remember your goals — think S.M.A.R.T.E.R.
Specific — know exactly what your goal is so you can create a plan. Ask the W’s: what do I want to accomplish, why I want to accomplish it and who is involved. “I want my children to have money to help with college.”
Measurable — is a specific amount. How much or how many and when? For example, “I will save $12,000 for each of my children to go to college within ten years.”
Action — is how you act on your goal. “I will open a college fund and deposit $250 a month.”
Realistic — is your goal setting you up to succeed or fail? If you have $150 after you pay your monthly expenses, it’s not realistic to deposit $250 a month into a college fund.
Time-oriented — set a reasonable time frame to complete your goal.
Evaluate — take a look at your goals regularly. Do you need to make changes?
Re-evaluate and revise — this enables you to make changes.You can make adjustments to your goal depending on the results of the evaluation.
Your financial goals should not only be attainable but also flexible as they need to change as your life situations and economic conditions change. Your plan should suit you; a plan for a young person just out of college will not help a married couple just about to retire.
As we end the year, I’m so thankful that I have been able to help so many people through this column. I enjoy the feedback, recommendations and questions I receive. I wish everyone a prosperous 2014. Happy New Year, Guam!
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at firstname.lastname@example.org and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.