Start with setting goals (big and small), then take steps to stay on track.
We all have dreams that require money. Common ones are buying a house, paying down debt, retirement and taking a dream vacation. Setting financial goals puts you on track to making your dreams reality. Use these tips to help you succeed.
Tip 1: Set small and big goals
When setting financial goals, have at least one small goal and one large one. What’s big or small is up to you—finances and dreams are unique to each of us. Set goals for what’s important to you.
The beauty of smaller goals is that they’re easier to attain. When you win at saving $150 for something like a night out, it gives you momentum to keep working for those bigger goals, like a downpayment on a house.
After setting your goals, be sure to incorporate them into your budget.
Tip 2: Prioritize your goals
Listing your goals and prioritizing them helps you succeed in two ways.
First, a stated goal helps direct your spending and saving. Say you want to earn income as a consultant; buying a laptop is an investment that puts you one step closer to your goal. On the savings side, perhaps your eye is on a new TV that’s better, bigger and smarter than the one you have. If a new TV isn’t one of your priorities, your list of priorities anchors your spending so you don’t drift off financially.
Also, a prioritized list of financial goals helps you save for multiple things at once. For example, if you have three goals, you can assign each a percentage of your savings. Goal #1/Emergency Fund may get 50%, while Goal #2/Pay down debt gets 40%, and Goal #3/Concert Tickets gets 10%. Again, you decide how much goes toward each goal.
Tip 3: Track progress and consider an accountability partner
Runners record times, teachers assign grades and dieters count calories all for the same reason: to track progress and reach goals. Doing likewise with our financial goals helps us succeed too.
Your method of tracking financial goals can take any form you find easiest to use and will stick to. It could be old-school paper and pencil or an Excel spreadsheet. It might even be an app. The method doesn’t matter as long as you stick with it to track progress and stay within your budget.
Another way to stay on track is to tap into the power of an accountability partner. Most of us know that if we commit to walk with a friend we’re more likely to get out there and walk at 7 a.m. than if we plan to go by ourselves. The same dynamic works with financial goals. Share your financial goals with a trusted friend or loved one. It’s helpful if they share theirs too, but it’s not necessary. At set intervals, perhaps once a week or once a month, have a check-in.
Check-in conversations with an accountability partner are a time to acknowledge progress or setbacks. Talk about what’s working and what’s not to stay on track with your financial goals. And celebrate when you reach goals!
Knowing we have to account for our progress is exactly what many of us need to succeed financially, just like athletes progress better with a coach who holds them accountable.
Tip 4: Celebrate success
You may have noticed in the examples above we have what might be classified as serious goals (emergency fund) and fun goals (concert tix). As adults, we know the importance of the serious goals. It’s easy to overlook the fun stuff. But setting aside dollars for fun allows you to have a good time guilt-free when you meet your goals.
You can also celebrate incremental success toward bigger goals. For example, when you reach milestones at 10% increments, treat yourself to something that doesn’t cost a lot like a fancy coffee drink, or something that’s free like a spa night at home or walk on your favorite trail. Either way, do something intentional to honor your success. This will help you maintain motivation.
Tip 5: Periodically re-evaluate
Whenever you meet a financial goal, have a change in your job or relationship or are faced with unexpected expenses, re-evaluate your goals. Re-align them with your current situation. Maybe it’s time to invest or save money for your kids’ education. Create a new list and prioritize it.
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