For some, the start of a new financial year is the perfect time to set new money goals. If you’ve found yourself struggling to hit your savings goals recently you’re not alone. A study by Coredata and Choosi uncovered that 59.5% of Aussies said they struggle with saving money regularly. If you can measure your success, you’re more likely to stay in control and reach your targets. We spoke to Michelle House, a financial literacy educator, who tells us the secrets behind clearly defining your money goals, staying motivated and finding financial freedom.
Write down all your financial goals
Writing down your financial goals is the first step to ensuring you stick to your savings plan. These goals should be high enough to challenge you but not so ambitious that it’s unachievable. Be specific and attach dollar values to each goal. Avoid vague financial targets. Instead of saying “I want to save more this year”, say “I want to save $__ by [date]”.
Organise and prioritise
Organise your goals into short, medium and long-term outcomes. This will help show you how much you’ll need to save for each goal. The amount you put towards each goal should always fit within your budget and not put a strain on your daily expenses.
Once you’ve organised your goals it’s time to prioritise them. You can’t do everything at once (although sometimes it feels like you have to) so being clear on the order of your financial goals will help keep you within your budget and stress-free. To figure out which goals are most important to you, rank your goals from 1 to 5. Anything you consider a 1 should be a priority.
Hint – Debt repayment should always be at the top of your prioritised list with long term savings further down.
Setting deadlines turns your goals from ideas to into actions. Deadlines will drive you forward and give you tangible markers to gauge your success. It’s important to set realistic deadlines within appropriate times, dates or days. An example of a well-defined deadline may be:
- By October 1st, 5 months from now, I will have paid off my credit card debts and have $3000 in my savings account.
Start off with small and achievable goals
Looking down at a long list of financial goals can feel intimidating. It’s easy to get overwhelmed. By breaking down larger goals into a series of realistic mini goals you can track your progress and build towards a sense of achievement. Good financial management comes from handling your money well, and handling your money well comes when you’re motivated and focused. Handling your finances shouldn’t be all work though so celebrate your mini milestones as you reach them. Just don’t go breaking the bank doing it!
Large and intimidating money goals are less overwhelming when you break down what each chunk of your savings is headed towards. Whether it’s credit card payments, car loans or mortgages, breaking down your financial goals make it manageable and gives you a little something to celebrate every week.
Display your goals EVERYWHERE
Write down your goals and find pictures that align with them make sure they’re displayed prominently where you will see them. Pictures of the car or holiday everywhere. Ideally, you want to be using both sides of your brain and activating and creating as many neural pathways as possible. Our analytical left brain has taken care of the numbers, now stimulate the right side of the brain, the creative side with visual pictures.
Your financial goals are just that, yours, so it’s important to be accountable. Stick them on the fridge, save them on your smartphone, wherever you like if you’ll see them daily.
Research has shown that individuals who write down and constantly monitor their goals are more likely to achieve them. How could you possibly keep track of goals you don’t see? Out of sight is out of mind so keep your goals in sight and work towards them daily.
Visualise yourself reaching your goals
People who have a rich life with everything they want include visualisation as a DAILY practice. Set aside time to consciously act and be your dream/desire/goal. Close your eyes and visualise your dream financial purchase. If you’ve always wanted to get a new car, picture the wind in your face, the sound of the engine and the colour of the exterior. You’ll notice how much more real the goal feels than if you’d just written it down. No matter what your financial goals are, vividly imagining them motivates and stimulates the parts of the brain that would be firing if you had actually achieved the goal. It’s easy to live in the moment and be frivolous when your money goals exist in theory. But focusing on those goals and picturing them as a reality will make it that much easier to put money aside and stay on track to reach them.
Work out how you’ll achieve your goals and set up the process to get there
Don’t wait until the next big thing to start working towards your financial goals. The next paycheck. The next bonus. The next promotion. You’ll start the journey towards your goals when you figure out how much you need to save and how to save it. This process might be measured in days, weeks or months, depending on the size and priority of your goal. Set up an automated debit system, like an instant bank transfer, to take care of the finances for you. Putting processes in place that follow through on your planning will make sure your ideas have a practical way of becoming real.
What seems confronting and overwhelming becomes manageable when you list your goals and their importance in your life. Give yourself realistic deadlines that challenge you and celebrate each small financial milestone on the road to success. Keeping track of your progress and staying on track with your process will turn your dreams of financial security into a reality.
Michelle House is the face and brains behind Rich Living, a financial education site that helps others save money. You can find research on this topic here from Choosi. You can also follow Michelle and discover more amazing tips on Facebook.