You’ll never reach a financial goal you never set. Not exactly a profound statement, but simple and true. If there’s something you want to achieve, you’re much better served setting a goal and tracking your progress along the way. But before you do, ask yourself a few questions:
Are you going through life with a sense of purpose and direction? Or aimlessly hoping to reach some unspoken financial goal? Do you want to retire? Do you want to buy a home? Do you want to get out of debt? Most of you who read this want to achieve these goals. Have you made any progress?
We all have financial goals and I would guess some of them are similar to the questions above. Simply hoping that you will be able to retire, buy a home, or get out of debt will likely lead to failure. Why? Because hopes are not action oriented. Hopes are more like future dreams and visions of how life could be.
Goals are solid and foundational. When used properly, goals can greatly increase your chances of reaching those off-in-the-distance dreams. So here are 3 more questions to help you identify a solid path: Where am I now? Where do I want to be? What steps do I need to take to get there?
Once you know where you want to be, you can break up the big task into manageable sections. This also makes it easier to track your progress. For example, let’s say you want to save $5,000 to buy a used car with cash, and you want to have that money set aside in your savings account one year from now. That’s a big goal and seems daunting at first. But if you break the $5,000 goal into 12 separate $416.66 goals, things look a little bit more manageable. You don’t need to focus on setting aside $5,000. Instead, focus on setting aside a little more than $400 per month.
A little more than two years ago, I decided I wanted to get my MBA by taking night classes at a local university. The program would take 2 years and I planned to keep working. It was a big task to wrap my head around. But I broke everything down into manageable bites and it made the overall process that much easier. I had to study for and take the GMAT, send in my application with GMAT score, and pay tuition. During classes I had to buy books, show up on time, do homework, complete projects and take tests. This may seem like a simple concept, but breaking big tasks (get my MBA) down into manageable steps (apply to school) makes the process a lot easier to handle.
What’s it all mean? For starters, stop dreaming about financial success and start planning for it. Identify 3 major goals you want to complete by the end of this year. Then, break each of the goals down into manageable steps. Have someone hold you accountable.
Tracking your goals — on the bathroom mirror, on your laptop, on the side of the refrigerator — provides motivation. Seeing yourself succeed at the small steps and growing closer to overall success will help you get over the bumps in the road that inevitably will pop up.
Start your financial goal planning today. And enjoy your success when you reach it.