Goal Setting

Why Set Goals

“People with goals succeed because they know where they’re going.” — Earl Nightingale

Setting out your financial goals is akin to putting out the flags for a cross-country race. We all remember those school events, hundreds of us kids all lined up and sent on our way, following the winding tracks through the bush guided by parents volunteering their afternoons to make sure us runners didn’t miss a turn. Imagine the chaos if the flags and volunteers weren’t there.

Without goals we can get lost in our purpose. If we don’t have direction then we tend to float along maintaining the status quo without any focus on improving the future. This can be a very dangerous space to live because before you know it you might be staring down the barrel of a less than ideal retirement without achieving many of the things you wish you had.

Talking through your life goals, writing them down and committing to them makes the single biggest difference in financial behaviours than anything else I’ve seen. Once people have a road map for what they are trying to achieve there is a purpose and focus to the actions that they take which enables them to see true value in making good financial decisions. The positive financial behaviour translates into a better lifestyle and ultimately greater overall happiness.

How To Set Goals

Making your goals realistic is key. There is no point striving to be CEO of Google in 2 years if you’re 3 years from graduating. Your goals need to be SMART; meaning that they are:

  • Specific
  • Measurable
  • Achievable
  • Realistic
  • Timely

It’s also important to break each goal down into smaller steps. If you’re goal is to have a house deposit of $100,000 in 5 years, there is a lot of hard work between now and then for seemingly no reward. Breaking your goals down into smaller, more achievable chunks like saving $10,000 every 6 months keeps you motivated and feeling a sense of achievement along the way.

Track Your Goals

The advancements in technology are hugely disrupting the old school thinking around so many facets of personal finance and tracking the progress of your goals is no exception. As an example, some major banks (Commonwealth Bank for example) allow you to link specific goals with savings accounts, setting up direct debits and actively following your progress towards success. The ability to link your goals with actual accounts and get a visual representation of the decisions to save, or spend, can really help keep you keep accountable to the promises that you made to yourself.

If you really want to get serious about setting your goals you can always use a site like Goal Buddy which allows you to get detailed with your goals (not just financial) and set yourself text message reminders and overdue notices as you track your way to success.

If you really do have long-term goals that are complex and hard to quantify, it might be worthwhile taking the conversation to a professional and getting their help to work through a strategic plan. It can be a great benefit if you have some complexity in your finances as they will be able to think of strategies that enhance your capacity to achieve goals that you might have thought possible.

Write Your Goals Down

This is the single most important step in the process. Writing down your goals makes them real. You can see them, they are tangible and cannot be dismissed as a passing thought. When they are given to another person, whether it be a loved one, a trusted friend or an Adviser, the power of the written word is compounded. Your goals are now shared with somebody else that you don’t want to disappoint and by writing them down you’ve made a commitment.

Write them down. Share them. Complete them.

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Please note that Get Finucated is not a Financial Adviser and the information contained on this website may be considered as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances.

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