Setting personal financial goals are a big part of achieving overall financial health. They keep us moving forward and ensure that, down the road, we have the things we want. But what's the best way to set a financial goal, especially for a first-timer?
So many people start out setting their financial goals the same way they set their failed new years resolutions. They start big, they don't quantify their goals correctly, and they set a finish date that is too far in the future.
How many times have you heard this:
“I'm going to lose weight this year, like really, I gonna do it. This year will be different!”
There are so many problems with this type of goal. But instead of pointing out what not to do. Let's see what we should do:
How to Set Personal Financial Goals in Four Steps
#1 – Set a Quantifiable Goal
Instead of saying you are finally going to start really paying off your student loans this year, how about we attach a dollar value to that goal? How about “I'm going to pay $7,500 off my student loans this year”. Lauren did this in her $8k in 90 day challenge. This gives an identifiable number to shoot for, and it's very black and white regarding whether or not this goal has been reached. Paying off $7,500 in student loans was my very first financial goal that I set in 2012.
#2 – Set an Achievable Goal
It's important to set a goal that you can actually achieve. Instead of trying to accomplish some crazy goal, like paying off alllll the debt. Set something reasonable. For me, in 2012, my very first year of debt repayment, I thought $7,500 seemed like a good number. I had never tried to pay off my student loans aggressively before this, so I didn't know what I was capable of. I picked a number I thought I could achieve.
#3 – Set a Short Time Frame
A whole year is a long time to commit to a goal. So many things could change, and enthusiasm is certain to wane. To help make a goal more achievable, try setting a small goal, that will be reached a few months after setting it. Or, if you're sure a one-year goal is for you, check in periodically throughout the year to make sure you're on track.
# 4 – Build Momentum
Getting into goal setting can take some time. Learning to ramp up your goal setting can be a great way to positively reinforce your goals. Set smaller ones at first, and once you've had success reaching them, and you understand what you're actually capable of, set more.
In 2012, I set three goals. I reached them all before September of 2012. So, in 2013, I ramped things up a bit. I set five goals, all of which are much more difficult to achieve than my 2012 goals. So far, I've reached three, and I'm definitely going to have to stretch to reach the other two before the end of 2013. I know what I'm capable of now, and I've correctly challenged myself.
Goal setting is an awesome way to motivate yourself to get off your butt, and accomplish things. Set your goals correctly to set yourself up for success.
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