By Daniel Rodriguez | Dr. Budgets
Another year has come and gone, and last year’s goals are now in the history books. So how did you do? If you want some guidance in achieving your financial goals this year, then read on! Below are 7 steps to achieving your financial goals this year:
1) Be SMART. No, I’m not talking about intelligence. The first step to achieving your goal is to set a strong financial goal that is SMART (Specific, Measurable, Achievable, Relevant, Time-Bound). In order for your goal to be strong, you have to really want it (do you have a strong emotional attachment to your goal?). Once you are emotionally invested in your goal, then being SMART with it will strengthen it even further.
2) Know Your WHY. Take some time to determine WHY your goal is so important to you. For example, my wife and I have a goal of moving from our condo to a single-family home in four years because our baby girl (on the way) and future unborn kids are very important to us. We want to raise our kids in a place that is large enough and located in a great school district because family, education, and stability are a top priority. Knowing the WHY behind your goal will help keep you on track when you stumble (and believe me, we all stumble!).
3) Find the Money. Once you have your goal and you know your why, then you need to consistently put money toward your goal. To do so you need to be aware of where you are currently spending your money, and then find savings within your current spending that can be used to fund your goal. One of my favorite tasks as a Dr. Budgets money coach is to find the savings within my client’s current spending that allows them to achieve their financial goals. The key is to keep spending money on what is important to you and cut spending in the areas where you receive very little value from your money.
4) Build A Plan. Now that you have all the facts and figures of your current spending and have determined where the money is going to come from to fund your goal, the next step is to build a spending plan that coincides with your SMART goal. This is also when you may have to adjust the “T” portion of your SMART goal based on your findings from Step 3.
5) Monitor Your Progress. Having a plan is worthless if you don’t follow it. Monitoring your progress and making adjustments along the way is critical to successfully achieving your goal. If you don’t know how you are doing, then you will be flying blind. When I coach my clients, I track their spending and monitor their progress toward their goals, which greatly increases their probability of success.
6) Celebrate! Setting some milestones (or mini financial goals) along the way toward your ultimate goal, then celebrating and rewarding yourself when you hit those milestones, makes your journey much more enjoyable and will help keep you motivated. So think of some experiences or things that you want, then use those as rewards for when you hit your milestones. Also, remember to celebrate when you do achieve your ultimate goal. This is an area where I have had trouble in the past, but I’ve been getting better at rewarding myself, which has made it more fun!
7) Repeat. Repeat Steps 1 – 6 for your next financial goal. I do recommend you limit the number of goals to a maximum of three. Ideally, you want to focus on just one financial goal at a time.
These are my 7 steps to achieving your financial goals this year. I hope you find these steps helpful as you start off the new year. What is your top financial goal this year? What will you do to achieve it? Wishing you a great start to the year!