I’ve always been a big believer in the power of setting goals. But for whatever reason, I never really brought goal setting into my money management philosophy. Now, don’t get me wrong – my husband and I don’t just cross our fingers and hope that we have enough in our checking account day in and day out. We aren’t that unfocused.
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However, we still always seemed to operate on a day-by-day basis. As long as money was coming in, less was going out. We were able to tuck away a little bit each month into our savings account, we figured we were doing just fine.
As we’re both quickly moving into our late twenties, I figured it was time for us to put an end to that short-term approach. It’s better to have an honest conversation about what we want to achieve with our money – and to discuss some actionable steps for us to get there. So that’s exactly what we did.
We now have a few different financial goals that provide us with a roadmap on how we handle every last penny. So far, I’m pretty happy with the progress resulting from our adjusted approach.
But if you’ve ever set goals before, you know it’s not quite as easy as determining what you want and writing it down.
No – there’s a bit more thought and strategy involved, especially if you want your goals to be motivating instead of frustrating.
So, here are a few tips that I learned as my husband and I moved through our own process. Give them a try. They’re sure to help you set money goals that actually inspire you.
1. Set Goals Based on Need and Timeframe
As we sat down to map out our goals, I realized that they stemmed from two different things: a specific need and a specific timeframe.
For example, we know we need a new sink and garbage disposal installed in our kitchen, which will require a pretty hefty investment – that’s a goal based on a specific need. However, we also know we’d like to have a certain dollar amount in our savings account by the end of the year – that’s a goal based on timeframe.
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In setting our own goals, I realized that it’s helpful to have a mix of these two different types. Not only does it present a little more variety, but it also ensures that you aren’t punishing yourself. After all, saying that you want to have all of your financial woes completely handled by the time you’re 30 will only add a ton of extra stress and frustration to your plate. Also, it will likely just set you up for failure. So if the sink is leaking, then yes, more money should be routed there urgently. And if it’s only dirty, maybe you can wait, and save up a little more money in the meantime.
2. Determine Action Steps
Does the following scenario sound familiar? You set an objective that you’d really like to achieve, and you’re motivated to get moving. This lasts for at least for a week or so. But after that? You manage to abandon that goal entirely.
We’ve all fallen into that trap before. It’s a great illustration of why setting one large end goal isn’t quite enough to get you started. You should also detail some action steps that will push you toward that objective.
This might look like putting aside a certain amount in savings each month. It might mean cutting a frivolous expense out of your monthly budget. My husband and I canceled cable and reduced the amount of times we went out to eat each week in order to tuck away more for that much-needed kitchen sink.
Rather than dreaming about it, identify the things you’ll need to do to actually accomplish that goal. It’ll make the entire thing seem much more manageable, and it will inspire you to actually stick with it.
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3. Mix Desire and Obligation
Yes, your goals should serve a purpose and help to get you to an improved place financially. But all work and no play is a definite recipe for disaster.
When setting our own goals, we worked to achieve a mix between ones that were rooted in desire – such as saving for a fun vacation (which we just enjoyed in July) – and others that were rooted in obligation – such as saving for retirement.
Aiming for this variety means that we don’t feel overwhelmed by different objectives we aren’t really excited about. And that ultimately keeps us more focused and motivated to stay on track. After all, if there are things you truly want on the line, you’re much more likely to actually succeed.