I would say one of the biggest challenges my husband and I used to have was keeping our financial goals. We were GREAT at setting them, but not so great at keeping them or even remembering what they were. Setting goals is important in life, but if you don’t keep them, there’s really no point in even setting them.
Now, we’re pretty good at keeping all of our goals. Wanna know our secret?
The secret to keeping your financial goals
PLAN FOR THE SHORT-TERM. More often than not, we would set a goal that was too far out into the future, such as “Save $15,000 this year.” While that was a great goal, since it was so far away it made it easy to forget about it or at the very least it made us feel like we didn’t really have to “act now” because, I mean, we had ALL YEAR to save $15K, right?? Short-term goals are much easier to stick to and they keep your focus in the now.
So, instead of setting a goal to save $15K each year, we’re aiming to save 1K each month (for those of you that are new, my husband and I are both self-employed and we’re not sure what our income is going to be yet, so this is actually a rough goal). Or we’ll set a goal to only spend $25 on dinners for the week to feed our family of four (this goal was met!).
What our financial goals look like
Everyone’s financial goals are going to be different. We don’t have student loans (paid them off), but we do have a $20K car loan. We have our emergency fund saved up, but we are trying to add to our savings for a down payment on a house. We’ve cut cable and other unnecessary expenses, but we probably go out to eat too much. We’re all different. Set goals that work for you and your family.
A few of our financial goals are as follows:
- Save for a down payment on a house. (General, I know…but this is what the $1K a month will go to.) When we first moved to NC, we wanted to buy a cheap house just so we could avoid paying $1300 a month in rent. Now that my husband is self-employed, we’re going to have to wait at least two years to even qualify for a home. This completely changed our thinking. We’re focusing now on earning more money that way we can afford our dream home, whether that’s in two years or five years. In the meantime, we will continue renting. Renting, even though pricey, does have many advantages.
- Contribute $100 per month to our new USAA mutual fund accounts we just opened (check! This will be done automatically.)
- Contribute $100 per month to John’s rollover IRA
- Save $1000 a month (again, this is iffy right now…this will be a more specific number in a month or so)
- Read “Rich Dad, Poor Dad” and “The Millionaire Next Door” this month
Steps to setting financial goals
STEP 1: Make sure your goals are attainable. Don’t try to save $500 a month if you know there’s no way that’s going to happen. Instead, save $50. Within 6 months, you’ll have $300. At that point, maybe you can up it to $100 a month and by the end of the year you’ll have $900 in savings. Every bit adds up and you have to start somewhere.
STEP 2: Pay yourself first. Once you decide on a goal, make that happen FIRST (before paying bills, before going out to eat, before anything).
STEP 3: Continue setting goals in the short-term. Once you start saving each month, for example, start focusing on another goal. Do you want to start investing? Make it a goal to get something opened this week. And then make it a goal to contribute monthly to that new investment. John and I are constantly setting and meeting new financial goals.
John and I’s ultimate goal is to become millionaires and live off passive income streams, but it’s going to take hundreds of tiny little baby steps to get there. That’s what we’re doing now – and eventually, we will look back on all this and be so glad we took action NOW instead of waiting!
Remember, the rich invest their money and make it earn them even more money, the poor spend their money. It’s as simple as that.
What are some of your financial goals? Do you set goals in the short or long-term?