Not Just a Target: The Key to Achieving Financial Goals

JAKARTA — Setting financial targets is often a common resolution made at the beginning of the year or when individuals wish to improve their financial condition.

However, experts contend that financial goals will not be achieved through target-setting alone. Changes in behaviour and habits in managing money are the determining factors.

An expert from Pamplin College of Business at The Virginia Polytechnic Institute and State University (Virginia Tech) believes that simple yet consistent financial habits form the primary foundation for achieving long-term financial goals.

These habits include basic steps such as tracking expenditure, creating a budget, and setting realistic savings targets.

Many people set financial targets such as saving more, paying off debt, or increasing investment. Nevertheless, these targets often fail because they are not accompanied by changes in daily habits.

Jesse Lineberry, assistant professor of practice and director of the Financial Planning and Wealth Management programme at Pamplin College of Business, Virginia Tech, explains that the most important initial step is understanding how money is being spent.

According to him, the process of recording expenditure will help individuals understand their actual financial patterns. Many people feel they are already managing money well, but after recording expenditure in detail, they become aware of spending that they had not previously noticed.

Tracking expenditure also serves as the basis for creating a more realistic budget. Without knowing where money is being spent, it is difficult for individuals to determine how much they can allocate towards savings or investment.

“Once that habit is formed, it will be easier to build upon it and increase your savings over time,” he said.

This means that once someone becomes accustomed to managing expenditure and saving regularly, subsequent steps such as increasing the amount saved or improving financial strategy become easier to implement.

This approach differs from the pattern that often occurs, which is attempting to make large changes all at once. For example, immediately setting a target to save a large sum without changing consumption habits.