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Setting Financial Goals

September 8, 2014

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16428244483_b014bfc188_zWhen it comes to getting your finances in order, there are lots of things that need to be done. Figuring out which ones are most important and getting everything accomplished can be hard if you don’t have achievable financial goals in place. Here are a few steps to help you get started with the goals on your road to financial freedom.

Identify the Big-Picture

Before you can set any goals, you need to first know what you are trying to achieve. If you are trying to get out of debt your goals to get there will be different from someone who is debt-free and instead is saving to buy their first house.

Make it Reasonable

Once you know what you want your end result to be, you can begin setting goals. Look at your budget, or if you don’t have one create one, so you know what you can reasonably accomplish within the time frame you determine.

One of the biggest mistakes people make is to set goals that are unachievable or unrealistic. Not meeting your goals can make you feel disappointed and may make you want to give up on reaching your end result.

Break it Down

Now that you have your reasonable goal in mind, you should consider breaking it down into smaller sub-goals. For example, if your goal is pay off $X of debt in one year, how much should you be paying off each month in order to hit your yearly target?

If this smaller goal looks unreasonable, you may have to make adjustments to your overall goal to make it more achievable.

Make a Plan

With your big picture goal and your smaller bite-sized goals in place, the next step is to make a plan with actionable steps for achieving your goals.

If your goal is to pay off debt, make your debt payments a priority over other spending by scheduling payments to come out of your account right after you are paid, before you’ve had a chance to spend your money elsewhere. Another actionable step if you have multiple streams of income is to put any “extra” money you have at the end of the month toward your goals as well.

Find Accountability

With your goals and actionable steps mapped out, now you need to find a way to make yourself, and your actions, accountable.

You could tell a close friend or family member about your goals so that they try to help remind you to rein in spending in favor of your meeting your goals.

Another way to hold yourself accountable is by creating a blog or writing in a journal. Both of these options give you the opportunity to stay anonymous and avoid letting your friends or family know about your financial situation, while still providing accountability. If you know you can successfully be accountable to yourself, a diary might be just what you need, but if you struggle with self-accountability and want to remain anonymous, an online blog may be the way to go.

Celebrate Milestones

As you work toward your end result, give yourself credit for the things you do correctly and successfully. This will help keep you motivated and help you to continue to want to work toward your goals. Add a small treat into your budget every now and then after you’ve made some good progress that you want to celebrate. You don’t want to go over the top with your celebrations and set yourself back from reaching your goals, so make sure the amount you choose to spend on these treats is reasonable.

Getting your finances in order can seem like a large tasks, but by identifying your big-picture goal, breaking it down, identifying specific actions, finding accountability, and celebrating your achievements, you can accomplish anything you set your mind to.

What are your financial goals?

Photo courtesy of: Equipe Integrada

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23 responses to “Setting Financial Goals

  1. I love the idea of breaking down your goals into sub-goals. I do this on the regular and it really helps! One thing I need to do is find accountability. I suppose that’s one reason I started my blog. I don’t have anyone really holding me accountable in real life. They’re all telling me I’m crazy for wanting to pay down debt quickly!

    1. You have to do what’s right for you and if that includes paying down debt as rapidly as possible, good for you! Don’t listen to the nay-sayers 🙂

  2. Great points! I actually created my blog to get myself accountable to pay off my debt – The only person that knows I am on this journey is my BF.

    PF support has been so great!

    1. I haven’t told anyone IRL yet either (and I don’t have a SO), so my blog is my accountability too! I need you guys to help keep me in line when I’ve been “bad” with my money, lol. 🙂

    1. I understand, I too find myself thinking, “Well I’m already over budget, so I might as well spend $x on fast food too.” It’s not a good habit to get into. Even if our budgets are blown, we should try to stay as close to it as possible (we should, but we don’t always, I know).

  3. I like to track progress against goals, but I am willing to modify them if I later find the goal was not realistic. I totally agree that the baby steps along the way get you where you want to go. Otherwise the overall target is daunting and you just don’t know where to begin to tackle it.

    1. I do have to change my goals sometimes too, but I try not to unless it’s totally necessary. Baby steps save my sanity!

  4. Setting goals is important. I like to keep things free as well as I know plans change all the time. Its good to have concrete plans but I think it is also important to keep some things loose so that you can change with the tide so to speak. Believe me, its something I have a lot of experience with.

    1. I have had to change some of my goals over the years too. To me, goals are not concrete, they can change as my needs change and depending upon how much progress I’m actually making. I don’t want them to be out of reach, but I do want them to make me stretch a bit to achieve them.

  5. Great tips, Kayla. I think “make it reasonable” is so important. When I work with people they tend to want to aim for the stars, which I love, but I also know when we are too aggressive we sometimes set ourselves up to fail, which can be very discouraging. So it’s finding that space where you pushing yourself but still being reasonable. And I definitely believe we need to celebrate victories – big and small. Acknowledge and celebrate those moments where you deliberately choose not to follow old habits and beliefs – because those are actually the biggest victories.

    1. Thanks Shannon! I totally agree with you, choosing to change is the hardest thing of all, no matter what you are trying to change – money habits, health habits, etc. 🙂 I do shoot for the stars with my main goals (ie: be debt free), but I do like to break it down into reasonable, more timely goals too (like pay off $7500 of debt this year).

  6. Love all of these, but particularly the points about accountability (one of the reasons I started a blog to begin with) and goals being reasonable. If you set the bar too high you’re never going to achieve your goal and then you’re just going to get frustrated and give up.

    1. Thanks KK! Accountability is a BIG part of why I started my blog too. You are so right about the consequences of setting your goals too high that they are unreasonable and unattainable.

  7. I agree, without a goal it is difficult to remain motivated in clearing debt and not accruing any more debt. I have blogged about my goals before by briefly, I would like to start a family soon and having £10k of credit card debt will be too much to handle in that situation.

    1. Remembering my end goals and WHY I want to get out of debt is what keeps me going when I just want to quit or give up and go shopping.

    1. I’ve never really thought about it like that, but I guess your intermediate term goal is save, save, save. After you debts are gone in order to be able to retire, you’ll have to sock a lot away! That is part of my plan too, but ideally I’d like to quit my job and pursue something I love (even if the pay is less) so it doesn’t feel like work everyday. Right now, I dread going to work…

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