5 Steps to Set Financial Goals- That You’ll Actually Stick To
Let’s just all admit it right now 2020 didn’t go how any of us had planned. Regardless of how prepared or unprepared, you were for a PANDEMIC; I’m sure if you think really hard, you’ll find you have some goals and aspirations for 2021. Having a goal for where you want your finances to be in 2021 is one of the most important goals you can set for yourself. But just saying you will spend less money and save more isn’t really a plan; it’s an idea. To succeed in your goals, you need a plan. Personally, I like SMART Goals. MindTools.com defines SMART Goals like this:
- Specific (simple, sensible, significant).
- Measurable (meaningful, motivating).
- Achievable (agreed, attainable).
- Relevant (reasonable, realistic, and resourced, results-based).
- Time-bound (time-based, time-limited, time/cost limited, timely, time-sensitive).
Using this as a foundation, we can develop an actual plan for setting your financial goals and staying on track all throughout the year.
Step One- Find Your Why: Rather it’s setting your children up for college, retiring with dignity, traveling, or even just being able to afford to go out to eat more often, find the reason that will keep you going and motivated on the hard days. It is easy to say I want to travel more. But when it’s 5:30, you’re late for an appointment, and you still haven’t eaten, that $5 dinner from Taco Bell starts to look pretty good. That $5’s adds up over time; two times a week is $520 a year. Now that might not get you across an ocean, but it’s a great start on a continental trip or starter fund for that world tour you’re determined to go on. And that’s just giving up Taco bell two times a week. Keeping your why at the forefront of your mind makes saying no a lot easier. It changes your mindset from “I can’t” to “I Choose.” I choose to be true to my goals, to stick to my plan, to say no today so that I get to where I want to be. It all starts with a compelling reason; we call it “your why.”
Step Two- Write a budget: No seriously, WRITE A BUDGET. Sorry, I don’t mean to yell, but if you aren’t writing a budget, then your money has no plan, and you can’t reach your goals without a plan. A written plan. In the words of Dave Ramsey, “A budget tells your money where to go.” If you need more savings, a budget shows you where you can save. If you need to pay off debt, a budget shows you what debt you have and how much you have left to spend. Need a budget sheet? Ours is great!
Step Three- Check in with your budget: Write a new budget each month and check in with it often, at least once a week. This goes back to having a plan and then checking in to see how well you’re sticking to it. You can’t wait till the end of the month to see if you’ve overspent. Imagine if you got a puppy and wanted to train it. So on the first of the month, you spend the day with the puppy, teaching it to sit and lay down and obey. But then you never interact with the puppy again until the end of the month. Obviously, the puppy will be hungry and will have destroyed everything in sight and made all sorts of messes. Even though you told the puppy what to do, you didn’t check-in and continue to train the puppy. You’d have no one to blame but yourself. The same can be said about your budget. You can’t wait until the end of the month to check in with your budget without finding a huge mess.
Step Four- Have an accountability partner: It sounds like a simple concept, a person you go to hold you accountable. But the truth is you need more than that. You need someone who is as invested in your goals as you are. Someone who can look you in the eye and tell you like it is without you tossing their opinion aside. If you’re married, your spouse is that person; you are already on the same financial journey, and checking in with each other regularly will help you get through the hard times and grow and strengthen your marriage. If you’re single, find that friend who believes in you. Get into a community of like-minded people. Find someone who understands the path you are on and is committed to helping you through the hard times.
Step Five- Be Patient and Preserver: Whatever your financial goals are in 2021, it won’t happen overnight. It’s going to take time to learn how to budget and stick to it. You might find that your why changes, and as you grow, your goal might even change. Your accountability partner might decide they can’t help you right now, or you might need to spend time getting your spouse on board. But each day you take charge of your money is one less day that your money runs away from you. It’s one week where you look at your bank account and do not know where your money went. It’s the knowledge that you have taken control of your life, and now you are deciding what happens from here.
2020 may not have gone the way any of us had planned, but let’s make sure it’s the last year you weren’t telling your money how it was going to work for you. Make sure that it’s the last year where you get to the end and all you have are Taco bell receipts to show for it. Make sure that this year is the year that you start taking strides to get to your financial goals.
You’ve got this; we believe in you.