Last week I had to write the About Me page for this blog. At the end, I wrote an overall goal for the blog. Without writing out a goal, I’d be tempted to let posts go off in all different directions. But a goal gives me focus and guides me when I feel at a loss of what to write about.
Goals will do the same for your personal finances. Especially specific goals.
If you say you want to “have money” or “be rich”, there’s no direction there. No definition. However, if you say you want to “have enough money to cover all of my bills for six months, just in case” or “have enough money to take a trip this summer to see my friends in England”. Those are specific goals, goals that you can attach a dollar amount to, and work towards.
Here’s an exercise to try, either privately, or down below in the comments section:
Write down your top five money goals. What do you want most right now? To never be overdrawn in your checking account again? To stop making payments on your car? or your credit card?
Write out your goals, and, attach a dollar amount to each goal.
The dollar amount will be easy if it’s a car loan or credit card you want to pay off, just write down the amount you owe. Other goals might require a little bit of fun research or planning. That trip to England I mentioned, look up flight costs, google a few hotels you might like to stay at. Not only will this research help you decide on a dollar amount to save for, but imaging yourself being there and visiting the various locations you find, will inspire you to sacrifice and actually save the money required to make your goal a reality.
Visualization helps so much with this. If there’s a certain dollar amount you want to reach, make a progress bar on a sheet of paper. Every time you put $50 in your savings account towards that goal, shade in a portion of the progress bar. When you can visually see your savings jump from 10% to 15% to 25%… you’ll stay motivated and on course.
Personally, I wrote two long-term goals, and three short-term goals:
- I want to be (and remain) consumer debt free. Which I currently am. Now I just need to work on my student loans to become completely debt free. Having no “easy, monthly payments” allows my money to work for me, rather than me working for my money. (10 years (for the school loans) and beyond)
- I want my small business’ sales to outperform the previous year, every year. When my business does well, the artists I work with do well, and, frankly, I do well. My record label will be exactly one year old next week, and first year sales have been incredible. It will be a personal and creative challenge to top them over the next year. (1 year and beyond)
- I want to put 20% down on my first house. Probably a condo. While living with Jenny is nice, and the rent for the two rooms here is cheap enough, I’d like my own place in the near future. (1-2 years)
- I want to pay cash for the production, studio time and hired musicians on my next album. Production costs look to be about $3,000 to $4,000. I’d like to pay this all in cash, up-front, no credit. (6 months)
- I want to be able to retire early and live off of the interest of my non-retirement investments. This is my biggest goal, which, if I’m able to save and invest at my current rate, will be attainable before I’m 40. (15 years)
It’s hard to start making changes in life. It’s less hard to continue, once you’ve made a change. Little sacrifices now can pay off huge later. But if you don’t have an attainable goal, you’re never going to have the motivation to make any changes… in your budget, in your career, or in your life.
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Hmm… I think my most immediate financial goal are to be comfortable paying for a Masters degree after I graduate from my Bachelors in less than two years. I’m not even sure how much that is right now – or how how much it’ll be when the time comes. Is it worth putting that in writing if I really don’t know what I’m aiming for?
I recently asked my parents to bail me out with a bank (I appreciated the irony) and I’ve closed that account and I’m promising myself that I wont have an overdraft ever again unless I can actually make money out of it (which is unlikely since I intend to get a job, not a business). So apart from student debts all I want to work off is debt to my parents (which they will likely refuse to let me pay back for a while anyway).
Ultimately my life-goal is to move somewhere (probably out of the UK) where I can be happy, but thinking 5 or more years into the future is a bit beyond my little brain/limited perception of time. How old were you when you started thinking about the really long term?
@Paul, I was 24 before I really realized that I was the only person in charge of my future and that I could either set my future self up to be happy, or miserable. It was at that point that I decided to take charge instead of just letting things happen to me. I’d always had the power and intelligence, just not the self-awareness to act on it.
The goals off the top of my head are:
-Pay off my Dad and my credit card bill (Will probably be attained after taxes next year…)
-Save up at least $2000 to help with living expenses for school (has to be completed by Sept. 2010)
-Have some money in the bank for emergencies or otherwise have some kind of savings (probably at least $2000 hopefully closer to 3 or $4000 by the time I’m done with school in June 2011)
I feel like this sounds kinda wishywashy…but my income isn’t quite set yet (insurance premiums haven’t started to come out yet), and I’m not sure what is going to come up in the next year, much like what happened to me this past year. These are things I would like to be able to happen, and hopefully with these in mind, I’ll be able to.
Somehow I managed to go to NYC this weekend and after looking at a school and hearing about cost, I didn’t go shopping like I planned. Sure maybe a mini $15 drugstore spree…but not $50 on clothes like I was going to allow myself.
You’re now in my head Alan.
There was a time early last year when I’d set goals every month, for my finances firstly but also for YouTube subscriber aims and personal creative achievements. Setting goals instead of dreams is SO important. Dream: be financially independent. Goal: save all surplus money between now and Christmas.
Goals take your dreams and makes them attainable.
Mine at present:
1) have ten grand saved by Christmas. So far I have £7,500, but I’m hoping my first round of Parrot Stories royalties on iTunes will tip me over. (Holding On did well.)
2) earn at least £1300 a month however I can. Ideally the thousand will be royalties from Chameleon Circuit and Parrot Stories, and the three hundred will be money to live on. That means I can save a grand a month, at least. (Hopefully more, once I release my new EP in February, second album next summer, and second Cham album in the distant future of 2010 …
3) save enough for a good deposit on a mortgage in London. I want a place I can own, and I want it to have ‘London’ in the address.
My financial goals are:
1) pay off the hospital bills in collections and avoid incurring new ones (2-3 years)
2) pay off my and my husband’s student loans (… will take awhile)
3) save enough for a damage deposit + 1 month’s rent and expenses so we can move to LA (aiming for Summer 2011)
Hmmm, as for my goals…
Long Term –
* Be able to put down a payment, maintain monthly payments, and afford insurance for a new-gen or vintage Mustang. (However long it takes, and no settling for a cheesy 1980s model! Financially not as difficult as getting my credit back up to a reasonable score.)
* Pay off mine and my fiancé’s student loans ($13,000 in total)
Short Term –
* Pay off my Capital One card that was set up for me by my parents in HS (6 – 12 months.)
* Have enough money by the time I move to purchase or rent a large, 4+ bedroom home. (June 2011!)
* Be able to have a wedding that I WANT and not have to downsize because of financial issues. (January 2011)
I’ve been working a lot lately to set up a budget and things like that, so actually writing out these goals has been very helpful, thanks.
Something I would like to see in future posts is a look at what affects your credit (Paying bills late? On time?) and how you can bring it up. My card that my parents set up for me has long been “cut off” from lack of payment (they were supposed to take care of it…then didn’t.) so my credit has plummeted, but I would like to bring it back up. See: Mustang Goal.
I don’t really have set long-term/short-term goals right now, but the basic ones I’m aiming for are:
1. Save up enough money to be able to attend at least one convention this summer without parental assistance.
2. Save up enough money to be able to sublet or live somewhere away from home over the summer (parents might force me to let them pitch in but I want to be able to pay some of it).
3. Talk to my mom about what kind of saving/retirement accounts she’s set up for me so just in case anything happens I know where it all stands (not really a financial goal but something I don’t have time for right at this moment).
I really like this idea – it kind of made me realize that I don’t really have a clearly defined money goal. I’d like to build some kind of passive income (and I’ve been somewhat working to that end in my free time) but I think if I want to get serious, I really need to commit. Getting it all down on paper (or in a Word doc) is a great start. As a freelancer, it can sometimes be difficult to motivate myself to keep my fingers moving instead of watching music videos all day – so I keep post cards laying around my desk that put my work into context. Kind of like little reminders that the reason I’m doing this is to achieve something. It helps.