How to Set (and Reach!) Your Money Goals
Every January the whole country goes into a goal setting frenzy. By February most people have fallen off the wagon, and by March many have completely forgotten what their goals were in the first place.
It is easy to brainstorm long lists of things that we think will make our lives better, but it is a whole lot more difficult to follow through and succeed. There are three main reasons New Year’s resolutions fail year after year:
The goals aren’t SMART
There are too many of them
There’s no system for staying on track
By not having these three things in place, we set ourselves up for failure. The same is true of our money goals. Most of us have them, at least in theory, but they’re usually so vague, numerous or confusing that we never reach them. Sound familiar?
The first step to setting & reaching your money goals is to make them SMART.
Specific
Measurable
Actionable
Realistic
Timely
If your original money goal was: “I want to save for a trip to Bali,” your SMART goal is: “By September 30, I will have saved $2,000 for a 2 week trip to Bali in December. I will save this money by Airbnbing my guest room for $80/night for at least 28 days over the next six months, not ordering from Postmates, and limiting my clothes shopping to $200 every other month.”
The new goal is specific, it is measurable (you’ll know if you saved $2,000 or not), it is actionable (Airbnb, clothes shopping), realistic (you are giving yourself enough time to reach the goal and have a plan for how to do so) and It is timely (you have an end date).
SMART goals are great, but if you have too many of them you’ll fall right back in that goal failing cycle. Too many goals force us to spread our resources (money, time, abilities) thin. Instead, try picking only a handful - 1 to 3 max!
The last problem with our typical goal setting is that we don’t create systems for staying on track. Let’s go back to our Bali SMART goal. This is super specific, which is great, but if the plan (Airbnbing the guest room, quitting Postmates, and limiting clothes shopping) isn’t put into place correctly, you still won’t succeed.
That’s where backwards planning & action items come into play! Start by looking at your end date. If you want to save $2,000 by September, you’ll need to break that dollar amount down into monthly chunks. Next, you’ll need to figure out how much money you’ll save from Airbnb and how much money you’ll save from shopping less. From there you can make clear action steps for yourself! I highly recommend putting those action steps in your calendar or as phone reminders so that they stay top of mind.
Ready to create your perfect goals? Check out this Goal Setting freebie.
Knowing exactly how to make a money goal SMART is tough without knowing how you currently spend, make and save money. Even if you think you have a pretty good idea, or you use an App like Mint that categorizes your spending, tracking each purchase can be incredibly powerful. Human brains aren’t great at remembering and calculating spending details, especially when those purchases are habitual. If you’re struggling with the action planning portion of your money goal setting endeavors, start tracking your daily spending! You can write down your spending in a journal, on your phone, a spreadsheet, or, if you want extra help to figure out this whole goal setting thing, check out the Verdi Money Club (virtual group coaching) to get your very own Verdi Tracker plus a whole lot of love, guidance and accountability.
As always, I want to hear from you! What questions do you have? How can I help you on your personal money journey?