By Queen Oluigbo

April 26, 2024

Believe me, it feels so good to reach your financial goals. The joy that comes with it can make you come alive in so many ways. Personal financial goals, when met, can do a lot of good to a person’s mental, physical and psychological well-being.

Some of the many ways to reach your personal financial goals include monetizing your hobby. If you have a passion-driven skill, find a way to make some money from it. Drawing up a savings plan also enables you to plan for your goals and be readily prepared to execute them when the time comes. Most importantly, ensure the use of the SMART method in setting your personal financial goals. When it comes to goal-setting, its important to use the widely recognized SMART method which stands for S (Specific), M (Measurable), A (Action-oriented), R (Realistic), and T (Time-bound). Personal financial goals need to be specific and measurable. For instance, saying youre aiming to save N10,000 on a monthly basis is specific and measurable than just saying you will save some money. These objectives also need to be action-oriented. For example, limiting your monthly expenses to 50 per cent of your salary requires action than just saying you want to mop up funds, which is not action-oriented. It is also essential to create goals that are realistic and set within specific timeframes. The best realistic method is to organize your goals according to short-term, mid-term, and long-term goals. Short-term goals are goals that can be achieved within a short period of time, such as becoming debt free, saving for a house rent, or saving for a child’s education. Most insurance companies in Nigeria have short-term savings plans that provide the policy holder an opportunity for systematic accumulation of funds over a period of time. Some of the plans run for a minimum duration of three years and the minimum monthly premium is N5,000 for individuals within the age bracket of 18-65 years. At maturity, 100 per cent of money contributed plus accrued interest is paid. Such a plan can assist one to mop up fund to set up personal business or invest in real estate/capital market.

There are also long-term policies with a minimum duration of five years. These policies of five years and above are for long-term goals, such as buying a property or investing in a retirement fund. But of course, the policy holder reserves the right to decide what the fund will be used for. Many insurance companies invest 90 per cent of the premium paid by the policy holder, while 10 per cent is used to purchase death cover for the policy holder. At maturity, 100 per cent of invested fund plus all the accrued interest is paid to the insured. The policy holder, if so desired, can equally access some percentage of the accumulated fund before maturity as stipulated in the policy document.

Its a good practice to always attach deadlines to your financial goals. Growing your investment portfolio to N2 million by the end of 2025 is more likely going to motivate you than the same goal without a deadline. For example, Madam Anita, whose daughter will be going into the senior secondary school in the next academic session, has drawn up a personal financial plan to mop up at least N900,000 by 2027 to meet her goal of sending her daughter to the university with ease. Of course, being realistic too, she is not thinking of a private university because her finances cannot carry it. She has, therefore, decided to save N25,000 monthly in a three-year short-term investment savings plan. With the knowledge she already has about insurance savings, what her monthly income is, and also putting into consideration her already existing 10-year insurance savings policy where she is setting aside N20,000 monthly, Madam Anita has thought it wise to start the short-term policy this 2024, bearing in mind what it will likely take to settle her daughters university school fees, accommodation, and other expenses when she gains admission in 2027.

If you have multiple financial targets, make sure to plan and prioritize them carefully. For instance, if you want to buy a property in 10 years, put the right financial plan in place and go to work. The 10-year savings policy that Madam Anita already has, which has been in place for the past five years, is for her long-term goal of becoming a landowner. By the time the policy matures, she would have saved N20,000 every month for 10 years, which will amount to N2.4 million, enough to get her a plot of land in some locations.

To reach your already set goals requires that you avoid impulse purchases. It can be tempting to buy something on a whim, but wait for at least 24 hours before making a decision. Make sure to save a specific portion of your income each month. For instance, you can aim to save at least 20 per cent of your monthly salary. Maximize your savings by putting them in an interest-bearing savings account and also in an account you dont have access to till the stipulated number of years. Insurance savings is your best bet. If your main job allows you, take on a part-time job or start your own business by monetizing that your hobby. Plan B income de really help!

Queen Oluigbo, a personal finance advisor, can be reached via [email protected]

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The Nigerian Observer is a daily newspaper published in Benin City, Edo State, Nigeria, since 1968 by the Bendel Newspapers Company Limited (BNCL) and is owned by the Edo State Government

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