In my last post, I suggested looking at the pandemic as an opportunity. Since we don’t know how long social distancing will last, use this time to focus on saving money and changing your spending habits. So that once things get “back to normal,” you’ll be ready to rejoin the world armed with new spending habits.
Knowing Why You’re Saving Money Is Key To Being Successful
Knowing why you’re saving money is key to being successful. If your budget is your short term spending plan, then your financial goals are your long term spending plan. Setting financial goals helps you stay focused and committed to your monthly budget so you can reach your long term goals.
When You Think About Your Life In 5, 10 Or 20 Years, What Does It Look Like?
Setting financial goals may not be something you’ve ever considered, especially if you’re barely getting by. Don’t let your current circumstances keep you from planning your future. A modest income makes financial planning tricky, but not impossible.
In all honesty, I’ve never expressed my financial goals. There’s something intimidating about putting goals in writing. When I think about my financial goals, it’s private and no one knows but me. Writing my goals down feels like I’m making a public declaration and a commitment to my future self. As it turns out, there’s science to back up my reluctance: you’re 42% more likely to achieve your goals if you write them down!
Perhaps on some level, I haven’t wanted to put my goals in motion. I think I’ve been waiting to find a partner so we could plan for the future together. News flash, sister: he may show up next week, in 10 years or not at all. So, putting things off until your person comes along ends RIGHT NOW! Whatever the excuse, I encourage you to think big, be brave and proclaim your vision. So, here goes nothing…
My goal is to be financially independent
I’ve struggled with job insecurity and underemployment for most of my adult life. I’ve felt my compensation hasn’t matched my effort and contribution to the company. Creating self-sustaining income streams puts me in charge of my future.
Types of Financial Goals
There are three types of financial goals: short-term, mid-term and long-term goals. Each goal fits into a category based on the amount of time it will take to complete it. For example, my goal of financial independence is a long-term goal.
Short-Term Goals
Short-term goals can be accomplished in one year or less. Here are some examples: buy a new couch, create an emergency savings fund, pay off a home repair, save for a vacation.
Mid-Term Goals
Mid-term goals take three-five years to complete. Examples of mid-term goals include pay off credit card debt, save for a down payment on a home, start a business, buy a new car, save for retirement or investing.
Long-Term Goals
Long-Term Goals take five years or more to carry out. Examples of long-term goals include live debt-free, pay off your mortgage, build passive income from investments, a once in a lifetime vacation. Long-term goals are often made up of short and mid-term goals.
SMART Goals
Writing down your goals forces you to clarify what you want and envision how you will achieve it. SMART is an acronym for a technique that supports realistic goal setting. Whether it’s a short, mid or long-term goal, make sure your goal meets the five criteria below so you have the best chance for success.
Specific: In order for a goal to be attainable, it needs to be specific. The more specific the better. Why do I want to achieve this? Who is involved? Where will it take place?
Measurable: What evidence will help me measure my progress? How will I know when I’ve reached my goal?
Achievable: Do I have the time, talent, education, expertise, money and resources necessary to achieve this goal?
Relevant: Why is this goal meaningful to me? Is it something I truly want? Is it aligned with my personal values?
Time-Bound: Setting a deadline helps you stay on track. But, also make sure your timeline is realistic and flexible.
SMART Goal Example
Since I confessed I haven’t written down my financial goals, I’ll use my long-term goal as an example. Afterall, I should practice what I preach. 😉
Long-Term Goal: Become financially independent.
Specific: I will create multiple income streams by monetizing my blog, purchasing an income property, and become a financial coach.
Measurable: I will write four posts per month and build my subscriber base, save money for a downpayment and take a financial coaching course.
Achievable: My life circumstances have provided an opportunity to become a frugal living expert. I’m currently working part-time so I’ll use my extra time to work on my blog and take the course.
Relevant: Job insecurity and unemployment have shown me that diversifying my income streams and working toward financial independence will allow me to become my own boss.
Time-Bound: I will take the financial coaching class and monetize my blog within the next six months (by April 2021). I will purchase an income property within the next three years. I aim to be financially independent in six years.
Conclusion
It took me over a week to write this blog post. Oh, I had plenty of time, but the topic was surprisingly difficult and forced me to confront a simple question.
Why haven’t I planned for my future?!
Ahhh yes. Because Plan A didn’t pan out and neither has Plan B, Plan C or Plan D. So for the sake of self-preservation, I stopped planning or having ANY dreams. This topic forced me to look at myself square on in a way I haven’t been able to before.
I’ve been knocked down many times, but I’m still here. And I owe it to myself and my maker to try yet again. However, this time around, I’m taking a new approach.
As you consider your dreams, I encourage you to dig deep and search your soul. Sometimes it takes a while for an idea to form. Be patient. Give yourself the opportunity to be still and listen.
Proclaiming your vision is scary AF! Taking the first step is the hardest part. A goal requires you to look to the end and figure out what changes you need to make now in order to get what you want in the future.