If you’re the type of person that’s a planner by nature, then most likely you’re also good at establishing financial goals grounded in reality, goals that are achievable, and that also require a bit of a stretch. After all, if you’re goal oriented, setting goals that are too easy to reach can’t compare to the thrill of reaching or exceeding a personally challenging goal.
On the other hand, if you’re like the majority of people that find goal setting, especially financial goal setting, and extra especially long-term financial goal setting a skill challenging to a point of inaction, then please read on. And keep this in mind. Don't be afraid to set goals for yourself. A goal is a dream with a deadline, as they say, and with that mindset you're that much closer to your dreams.
Below are five tips that will help you become a winner at setting your own personal financial goals. And remember, practice makes the master.
1) Goals must be in alignment with your core values
Setting personal financial goals need to be more than just numbers or targets to reach sometime down the road. Instead, think about your goals as a personal expression of where you plan to focus your attention and intention. By making sure your goals are aligned with your core values and your dharma, you’ll be tapping into a higher power that will help you succeed in ways that are unimaginable.
2) Know your enough point when setting long-term financial goals
Knowing when enough is enough is a crucial element when setting your long-term financial goals. Coming up with your enough point requires contemplation, inner reflection and absolute self-honesty. For example, having realistic goals that help you reach financial independence (FI) need to be grounded in reality and offer enough challenge to keep you motivated over the long-term. Once you have established your enough point for FI, make sure to set quarterly and yearly milestones, keep your eye on the big picture but focus on the quarter to quarter, year to year goals to keep it real.
3) Singles and doubles still win the ball game
When setting financial goals, many go for the grand slam home run. Their goals need to be larger than life because after all, who doesn’t want to have big, lofty goals? The problem with these type of goals is that they are often unrealistic and not grounded in reality. It's far better to set goals that offer a little or a lot of stretch but are attainable and realistic. Maybe it’s saving a little extra each month or adding a little more each month to your 401k or IRA contributions, the singles and doubles of goal setting if you will. Small wins, whether monthly or quarterly will keep you motivated and help you stay on track.
4) Financial goals need to be about the positive, not the negative
Here’s where semantics intersects with reaching your financial goals. According to many psychologists that study behavioral finance, we humans have a far better chance of reaching our financial goals if for example we set a goal to save more instead of a goal to spend less. It's true that both result in the same outcome, but our brains and emotions react much more powerfully when we’re aiming our goal towards something positive, like a higher amount of savings each month as opposed to something we may perceive as a negative, such as spending less. Go with the flow and watch how much easier it is to achieve your goals.
5) Monitor, measure and course correct when needed
Once you’ve established your financial goals, both long range as well as short range, it’s essential you establish a regular schedule for monitoring and measuring your progress and course correcting when you go for an extended period of time without attaining your goals. Personally, I prefer checking in on goal progress on a quarterly basis. How you decide to schedule your check-ins are up to you, but never go more than a year without seeing how you’re doing. When you reach or exceed your annual goals, make sure to celebrate what Stephen Covey describes as our personal victories. Give yourself a pat on the back and rejoice in your success.
Action Step: If by chance you still feel like you need a little more guidance or structure establishing your financial goals, there’s no better book to read to help you than the classic best seller Think and Grow Rich, written by Napoleon Hill.
Don’t let the title fool you by thinking this is a get rich quick kind of book. Nothing could be farther from the truth. Written during the depression, it offers an elegant step-by-step guide on how to set your personal financial goals, how to use the power of auto-suggestion to plant seeds of abundance in your subconscious and how to use your power of intention to turn your dreams into reality. My goal is to listen to the audiobook version once a year. Why not set a goal to read or listen to this seminal book yourself?
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