The start of 2010 marks the beginning of not only a new year, but an entire new decade.  The beginning of the year is a great time to set goals and plan for the things you want to accomplish throughout the year.  Successful people set very specific goals that they make sure to write down.  These goals usually span a variety of areas of their lives, from health and fitness, to career goals, to training and education, to financial goals.  In this article we will focus on financial goals.

Yearly Financial Goals

There are many financial metrics that you can establish as goals for yourself.  One of the challenges of setting financial goals is that you don’t always have control of some aspects of your financial life.  For example, you may set a goal of getting a 5% raise, but despite all your efforts, you may not get a raise at all due to extraneous factors, such as a bad business cycle for your employer, or an overall recession.  Many of us suffered through this exact disappointment last year.  Investment goals are also hard to control because so much in the investment world is impacted by outside forces.

On the expense side, many times you are thrown a curve ball that you did not expect.  A major repair to your house or vehicle, an unexpected medical expense, an increase in the cost of fuel – these are all common examples that all of us have had to deal with one time or another.

But even if you don’t have full control of all aspects of your financial life, it is still good to set yearly goals.  Here are some metrics that I would suggest you set a goal for and measure every year, even if you don’t fully control it:

• Target income
• Yearly expenses
• Percentage of savings
• Return on investment
• Year-end net worth

Long-Term Financial Goals

Just as important as setting yearly goals is setting your long-term financial goals.  There is no better time to start thinking about long-term financial goals than in the beginning of a new decade.  Ask yourself this question:  Where do you want to be financially 10, 20 or even 30+ years from now?

This type of long-term planning is more difficult to do, and usually requires some introspection and serious thinking.  What you ought to be asking yourself is:

• What are your dreams?
• What will it cost to live your dreams?
• Given you current and expected income, percentage of savings, and rate of return on your investments, how long would it take to achieve these dreams?
• Are some dreams more important than others?  If a dream would require you having to work an additional 10 years, would you be willing to make the sacrifice to achieve that dream?

These are all profound questions that don’t always have easy answers, but it is extremely important that you think about them, discuss them with your loved ones, and write down.  Most people that achieve financial success are very good at doing this.

For many of us long-term financial goals have a direct relationship with the question of retirement.  How soon do you want to retire?  What does retirement really mean – no work at all, part time work, doing work that is more enjoyable, volunteering? 

Ask yourself this question: If today you were told all your daily expenses in your current lifestyle would be paid for indefinitely, would you stop working?  Would you work on something different?  Or would you simply continue to do what you are currently doing regardless?  You answer to this question will tell you a lot about your attitude and feelings towards your current work, and may help you decide how long you would be willing to continue working in order to acquire certain assets.  If you love your work, maybe it would make sense to keep working for a long time, giving you more time to acquire some material possessions.  If you hate your work, the price of working a few extra years maybe too high to pay for certain dreams.

Thinking through these questions will help you achieve the right balance between how long you want to continue working and the dreams these years of work will be buying.  What you don’t want to do is just live from paycheck to paycheck, with no financial goals and no management of your financial needs.  Understanding what you are working for, now and in the future, will help keep you motivated to do well in your work, which in and of itself can lead to a higher level of financial success.