August 20, 2024
Purposeless money is like a pathway-less car, which will move but you dont know where are you going. They act as your financial GPS, they keep you on track and allow you to measure real accomplishments.
I was a master at “saving” money with no real direction. Only to heed the message in spirit, immediately tuck a little away every time I got paid, give myself an atta-boy and then withdraw funds from that account any time something shiny caught my eye — weekend trip, new gizmo or whathaveyou. The result? Years of shuffling money without going anywhere. Only when I began to plan my goals did my spending become more strategic and less serendipitous.
Table of Contents
- This Is How Goals Change Everything
- Building a Roadmap With Financial Goals
- Short-Term, Mid-Term, and Long-Term Goals
- How to Make Your Goals Time-Bound and Achievable
- Monitor Progress (and Change, Without Guilt)
- Top Goal Setting Mistakes to Look Out For
- Final Takeaway
This Is How Goals Change Everything
It is not difficult to lose your money on pointless stuff, especially when there is no clear goal that you are working towards. Having clear goals aims your dollars While it is incredibly simple advice, being explicit about what you want out of your newfound financial friend can help you take control of the wheel and lead yourself off the proverbial ‘fiscal cliff’ — think owning a home some day, retiring earlier than expected or even just rebuilding your safety net; setting tangible goals can turn the wishful thinking into dedicated plans.
Seriously — you can partake in the quiz right here. after all, why would you embark on some sort of road trip not knowing where youre intending? Nor should your money.
Building a Roadmap With Financial Goals
A well-crafted goal is much like a map; it does not only give you direction but also helps you ascertain the best track to get to your destination. To me, that meant outlining a specific plan:
- My goal was to save $10,000 into an emergency fund.
- I calculated how much I could feasibly save each month after living costs.
- I decided on a deadline and systemized it.
All of a sudden, there was something for me to save for that had nothing to do with the vague concept of “I should be saving.
Short-Term, Mid-Term, and Long-Term Goals
Time frames are a way to break the goal up into manageable and accomplisable goals.
1–3 YEARS Build up an emergency fund, pay off small debts or plan to take a vacation
Trying to decide on whether to save for a down payment (to finally own property) or buy a franchise and start your business, or maybe go back and finish that degree.
Ideally, and in the long-term (7+ years): Retirement, FI/RE or possible generational wealth.
As I compartmentalized my goals into these sections, it occurred to me that maybe not everything was a “Today” goal. Less stress about money just from that one shift.
How to Make Your Goals Time-Bound and Achievable
Something like, “I want to save more money” is vague. For example, ” I will put aside $300 / month for 24 months to create a $7,200 buffer” is measurable and actionable.
If your goals are unrealistic, you will soon become disheartened and give up. I started by trying to save 50% of my income, which lasted all of two months before I reverted back to old ways. For me a much smaller, consistent goal worked better.
Monitor Progress (and Change, Without Guilt)
The world changes — your financial plan will change too That’s not failure, it’s reality. Every three months, I look over my goals and make sure that they jive with where I am in life.
For us, that has occasionally meant putting the brakes on a specific savings target in order to ramp up debt repayment. Well that means sometimes it is upping contributions when I hit a bonus. The goal is just to keep going, even when it looks and feels a bit different.
Top Setting Clear Goals Mistakes to Look Out For
- Vagueness: “Saving more” is not a goal, it’s a wish
- Attempting to continually multi-task: Focus trumps span of control.
- They get: Human beings need to live their life because cutting all the joys in your budget will fall on its face.
- One time I set five BIG GOALS AT ONCE. The result? I was a juggling act and not very good at it: I divided my time between all of them, and rarely gave any one of them the type of care they deserved. Lesson learned.
Final Takeaway
Defining proper goals is not only financial with nature, but a matter of self-orientation. Having a clear vision makes every decision easier. You have a purpose for your budget, your savings, your investments.
Call to Action
If you want to stop relying on fuzzy money habits, check out our Budgeting Solutions for ways to set clear goals that you can follow through one step at a time.
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FAQ
Q: How Many Goals Should I Have?
A: Be very selective, only 2–3 goals at a time so that you do not overwhelm yourself.
Q: What if my income changes, do I need to change my goals?
A: Yes. Your goals should change as your life changes.
Q: How Do I Stay Motivated Over Time?
A: Split big goals up into smaller milestones, so you can be happy ones at a time?
Financial disclaimer: this article is appeared for education purposes only, and not to be considered financial advice. Do your own research and consult with a licensed professional before making any investment decisions.
