Managing our money well, consciously spending less, and making sacrifices is hard work. Do you know what makes it easier? Financial goals. Having an end goal in mind motivates us and gives a purpose to all the hard money-saving work that we’re doing. Financial goals give us a clear sense of working for something instead of just spinning our wheels and going nowhere. Being intentional with our financial goals is crucial to our financial success. In this post I’m going to show you an easy process for setting achievable financial goals that will get you motivated to save.
4 SIMPLE STEPS FOR SETTING ACHIEVABLE FINANCIAL GOALS
Actually reaching our goals is much simpler than we make it out to be. Setting our goals is one of the most important, but often overlooked, steps to reaching our goals is to set our goals well. In this post I’m going to teach you the 4 simple steps for setting achievable financial goals.
Note: I have a FREE (and pretty) printable worksheet that will guide you through this process. You can grab your worksheet here.
WHY DO MY FINANCIAL GOALS NEED TO BE ACHIEVABLE?
You might have the “shoot for the moon, land among the stars” mindset. That’s perfectly nice and all for other areas of your life.
That is not the right mindset to have with your finances.
Failing at our financial goals has a particularly nasty affect on us. Especially if we have struggled with money in the past.
Missing our financial goals can make us feel like we are “just bad with money” and that the problem is us.
I can’t tell you how many times I fell into this trap.
But friends, I’m here to tell you, the problem is not us!
The problem is our goals.
When we overcome our lousy goals and replace them with strategic, achievable ones we will be much more likely to actually reach them.
Achieving our financial goals has a far-reaching effect on our finances and our lives.
Meeting our goals makes us feel empowered as a financial success.
And when you feel financially successful you are much more likely to continue managing your money well.
Here are the 4 simple steps for setting achievable financial goals
1. Be specific with WHAT your goal is
If you just claim a vague goal, like “oh, I’d like to have some more money” that is never going to get you anywhere.
Wanting to have “some more money” isn’t specific enough. As a result, you won’t be motivated to reach it.
Instead of having broad, uninspiring goals that will get us nowhere, we need to be intentional about setting goals that light a fire in us and keep us working hard to achieve them.
A well-crafted, super motivating financial goal is very specific. The more detailed your goal can be, the better!
So, instead of saying that you want to have more money, decide on a exact amount that you want to save.
Maybe you want to pay off a chunk of your debt this year. Instead of having a vague goal of paying down some of your debt, set a specific goal of paying off a certain amount.
For example, I want to pay down $10,000 of student loan debt.
2. Define your WHY
This is the most important part of actually achieving your goals.
You need to know why you want it.
You’ve got to know exactly how your life will be different when you reach this goal.
Be super specific with your why!
Don’t just say that your life will be different because you will have more money.
What will that money mean for you and your family? Maybe it will mean you’ll finally be able to go on that vacation that you’ve always dreamed about?
Or maybe it will mean that you pay off a debt and no longer have a $250 payment each month.
Here’s the key: It has to be something that you really, really want!
This is what will keep you going when things get hard.
3. Set a due date
You must give your goal a timeline!
When your goals have an end date they will actually be much easier to reach.
If your end date is just random point in the future you won’t be as motivated to work to reach your goal.
Be strategic with the date you choose. Make it challenging but attainable.
If your goal is to pay off $10,000 worth of debt, you probably won’t be able to do that in one month.
But perhaps you could do it in ten months.
Set a date that is specific to your personal financial goal and fits into your life and your financial situation.
Having a due date in place also allows you to make a plan. So, let’s talk about that…
4. Break it Down
Once you know the what, why, and when of your financial goal, the last step is to make a clear plan for how.
This step is absolutely essential to actually reaching your goals.
You need to break your big goal down into small bite-sized pieces. And those pieces are called action steps.
Think about the small things that are going to lead you to reach your big goal.
So, going back to our example in step 3, if your big financial goal is to pay off $10,000 of debt in ten months, you’ll first break that down into one month at a time and dedicate yourself to paying off $1,000 of debt each month.
Next, you’ll need to figure out where that $1,000 a month is going to come from.
Are you going to cut your expenses? Do you need to increase your income? Maybe you’re going to decide to take on a small side job 2 nights a week while you work toward your goal.
Most likely, you’ll be doing more than one thing. Each method is a separate action step.
Here is what your action steps might look like for this example:
- Pay $1,000 each month.
- Cut expenses:
- Lower my phone bill by $30 a month
- Eliminate take-out food: $120/month
- Reduce entertainment costs: $150/month
- Lower my grocery budget: $40/month
- Monthly Total: $340
- Make extra money:
- Tutor 2 nights per week: $165
- Monthly total: $660
- Tutor 2 nights per week: $165
Be as specific as you can with your action steps.
Notice in my example that I didn’t just say I was going to cut my expenses. I defined exactly how I would cut my costs and how much each would be cut from each expenses.
Hint: If cutting your expenses is one of your action steps, you can grab my FREE Expense Cutting Workbook here.
Just like with your timeline, make your action steps challenging but possible.
Eliminating take-out food might be difficult, but it’s totally possible and it frees up a big chunk of money that you can put toward reaching your goal.
Start accomplishing your financial goals
Take some time to work through these steps and set achievable financial goals. You can use your copy of my financial goals worksheet to organize each part of your goal. Include what, why, when, and how you will achieve your goal. I can’t wait to hear about what you’ve accomplished!
What financial goal are you working towards? Let us know in the comments below?
Want more ways to save?
7 Frugal Habits that will save you Thousands
5 Lifestyle Changes that will save you $100 every month
Meagan Eagles says
These are very smart tips. I especially loved the action steps… That’s where I usually stop HA Ha.. Pinning this for the reminder later.