How to Set and Achieve Financial Goals
Maybe you have a budget set up, or maybe you’re not there yet but you do have a large purchase on the horizon. Whichever situation you are in, you will have to know how to set and achieve financial goals. The process of creating a financial goal and following the steps to achieve that goal is something I have been working on and finessing for years. I thought I would share my dos and don’ts that I have learned from setting goals, making mistakes, and figuring out what works.
Know Where You Are Starting
This is the most basic – but the most important step of the process. You have to START. And more importantly, you must know where you are starting. You can do this with pen and paper, in an excel sheet, or on a Google Doc. Anywhere that you can write down these important parts of your financial goals:
Your goal. Is it a new car? A trip? Enough to pay off a debt?
Do you have any money to put towards this goal already? Make sure you write this down.
How much money is this goal. BE SPECIFIC. Write down how much this goal will cost.
Any extra costs to this goal (tax for example)
Now you will have a final GOAL amount. Your goal cost + any extra costs – any money you have to put towards your goal = the amount of money you want to save for your goal!
DON’T: Be Surprise by Unexpected Costs
This is something I have DEFINITELY done. There is nothing worse than being super excited to pay for your trip tickets and then realizing the extra costs (fees etc) AT THE ONLINE CHECKOUT. Speaking from experience. Not fun.
Separate Your Bank Accounts
This has been LIFE. CHANGING. If you bank somewhere where you have to pay to have multiple checking accounts, maybe consider banking elsewhere because this is such a useful feature for organizing your moneyyy. As soon as you set a money goal the best way to measure your progress is to have the money for your financial goals put into a new, separate checking account labelled with your goal. Like “New Car” or “Student Loan Paid Off”. This way you will SEE yourself getting closer to paying for your goal while also making sure you don’t accidentally use your goal money for something else.
DON’T: Keep all your money in one checking account
I tried. I failed. Learn from me.
Write Down Your Strategy
Okay so this might seem silly but it really does help. Let’s say you have a goal and you have a separate bank account for your financial goals, if your plan to achieve your goal is just to put aside money when you have a bit extra, that is probably not going to happen. Take a minute to WRITE DOWN your plan. Maybe you will cancel a $20/month subscription and use that to contribute to your money goal account each month. Or maybe you get tips at your job and you decide to put all your tips, or half of them, in that account until you reach your goal. However you decide to contribute to your goal, if you write it down you are much more likely to follow through.
DON’T: Have a Vague Goal
If you don’t have a set amount you are working towards it is not very motivating. Make sure there is an exact amount connected to your goal – and even better if you can contribute an exact amount each month so you know how long it will take before you reach your goal! The more specific, the better!
Have a Growth Mindset
I used to think that having a “growth mindset” was silly. But I have been really working on my mindset around money and it has really helped – particularly through the past few months of tough money decisions and layoffs.
A growth mindset is the perspective that there will always be enough (resources, opportunities, money). It is not being fearful of spending, because you know money will come into your life as you need it. It’s not very concrete advice – it’s more of an intangible change – but it has really helped me become more positive and opportunity-seeking than I was before.
A scarcity mindset is a mindset to AVOID when it comes to money. This is the perspective that you have to hold onto any money you have and that there is only so many opportunities out there – so you must fight over them.
DON’T: Forget to Actually Make the Purchase
Through my budgeting and creating financial goals, I get so excited about getting close to and achieving the goal but I also start to get a bit nervous to make the purchase. I mean, I just saved up all this hard-earned money and now I am just going to buy something? This is part of the mindset that money itself has value and I can only get so much (scarcity mindset) but this is not true AT ALL. Money is a means to an end (that’s why you made your awesome goal!) And if you work hard, learn how to manage your money, and develop that growth mindset, you can bring more of it into your life – hopefully for your next big goal!
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As Always, Belle