Setting Your Financial Goals

How much do you want to make next year?

Many work at home moms answer this question with a simple, "As much as possible." But often, as much as possible means you have to work "as much as possible." And, if you let it, "as much as possible" can begin to run your life. You'll always feel like you need to make one more call. Add one more person to your network. Make one more sale.

A better approach, from my standpoint, is to set your financial goal for the year. As you do, keep in mind that on average, most entrepreneurs keep around 40 percent of what they make. About 30% goes to pay taxes and 30% is consumed by overhead expenses. If you earn $100, your profit will be somewhere around $40. To earn a profit of $24,000, you'll have to have income of about $60,000. Kind of depressing, isn't it? But it's better to know this up front so that you can be realistic when setting your goals.

Once you have a number in mind, you can divide it by 12 in order to determine your targeted monthly income. Using the figure of $60,000, we can see we'll need to make about $5,000 a month in order to have a net profit of $24,000 at the end of the year. Dividing this further, we note we'll need to make $1,250 per week.

Why bother with all this math? First, you'll be able to see how realistic your finanical goals are. And second, when you have a measuring stick, it's easier to determine how you're doing. If you're ahead of your financial goal for the month, perhaps you can close the office door early a couple of nights or give yourself a day or two off. And if you're behind, you can decide if you want to work a little harder to get caught up, or to adjust your goal based on your family's needs.

Having a goal has made it easier for me to budget my time--and to set my fees based on what I hope to make. I'll address this in my next post.