The fast-track way to achieve financial goals is to set them in line with your core values. Then it’s just a matter of stepping your way to success.
Your goals should embrace your entire life. It is useful to think about them under the headings of Personal, Health, Financial and Career. Then look at three time horizons: one, five and 10 years. This creates 12 financial goals categories. You don’t need a goal for every category, so you don’t get too carried away. And keep in mind that some shorter-term goals may support longer-term ones.
How to achieve your financial goals
Financial goals are usually a consequence or a precursor of other goals. For example, you might set a career goal to be the owner of your own Yoga studio in five years. This may require you to pay for some training courses in the short term and pay for the fit out and launch of the studio in five years. It will likely create health goals as well, like fitness and flexibility.
Your overall values and lifestyle ground your finances. Here’s how to use them to achieve financial goals.
1. Break it down
Break your great big goal down into a few smaller goals. For example, if your goal is to complete a marathon in one year, set a goal that you can achieve in a shorter amount of time that will help you get there. Like completing a 5 km run in three months and a 10 km run in five.
In the same way, if your goal is to save a home deposit, break it down into smaller month by month, or even week by week savings goals that will get you there.
2. Identify the first step
You don’t need a detailed action plan for each goal, but you do need to identify the next action. That way, you can get started and build up some momentum.
3. Write it down
An unwritten goal is just a dream. Writing it down creates clarity and helps build commitment.
It also helps to write your goal in the present tense, as if it has already been achieved. This helps your brain accept that the goal is not just a dream; it can become reality.
4. Make it specific and measurable
The only way to be sure you have achieved a goal is with metrics. How will you measure success? How will you know your goal has been reached?
For example, saying I will lose weight is meaningless because it lacks a metric. I will lose 5kg by March sets a clear path to achievement. Set metrics for your savings goals and you will be more likely to stick to the plan needed to achieve them.
5. Give your goal a deadline
Giving your financial goal a deadline creates a sense of urgency, forcing you to pay attention. Write down the month, as well as the year. Don’t overthink it – just pick a date that you can work towards.
6. Use positive language
A goal should look and feel positive. Articulate what you will do, not what you won’t. This helps focus your energy on the positive outcome rather than the actions or behaviours you want to stop.
Replace I will eat less junk food with I eat fruit in the morning (as if it’s already happening). Replace I need to spend less with I choose to be careful with what I spend my money on.
7. Stretch yourself
When you’re planning your financial goals, keep things realistic or you’ll get disheartened and give up. Do challenge yourself, though. A goal just outside your comfort zone is ultimately more compelling than a ‘walk in the park’. If you have to stretch yourself, you’re more likely to achieve it and feel extra special when you do.
8. Keep your goals visible
The more often you can see what you’re working towards, the better. Stick your goals on a notice board, on the fridge or even the bathroom mirror; wherever works best for you. It’s easier to achieve financial goals when they are front of mind. Don’t forget to review them regularly.
9. Tell someone
You are much more likely to achieve financial goals if you commit to them by telling someone. It doesn’t matter who you tell; your partner, your BFF, a colleague or a friend or family member. Pick someone you trust who will call you out if you slack off.
10. Make your goal compelling
The most effective goals are those that are emotionally compelling. What personal reason do you have for doing this, or wanting this outcome? The reason becomes your incentive. For example, a bride-to-be is more likely to succeed at losing weight for her big day, than for a random Sunday in June.
You will be most likely to achieve financial goals if they ultimately allow you to lead the particular lifestyle you want. Know why that lifestyle matters to you enough to make some sacrifices along the way.
This is an edited version of an article that originally appeared on Life Sherpa and is republished here with permission. This article contains general information only. This should not be relied on as independent finance or tax advice. If you are after specific professional advice, speak to your registered tax agent/financial advisor or reach out to Life Sherpa.