We all have financial goals. Maybe you want to retire early, travel more, pay down debt, or save more money. Having goals is what drives us forward and keeps us from staying in the same place. Unfortunately, many of us haven’t really articulated our goals. We carry them around in our heads as vague notions. “Oh, I’d like to retire early,” or, “Gee, it’d be nice if we could shed some of this debt.” Because they’re so vague and ever-changing, we often don’t follow through on them. To keep the motivation strong, we need to make our goals obvious and trackable.
One of the best tools I have for managing my financial goals is a goal list. I keep it prominently displayed on my refrigerator so that I see it every day. On this list, I have all of my goals, major and minor, listed according to importance to me. On my list, saving for retirement is number one, followed by saving for a car, traveling more, and saving for a new heat pump. Sometimes there are smaller goals on there like saving for Christmas or saving for some “want” that I have. I have the total amount that I’m aiming for next to each goal. But it’s more than a list, it’s a living document that gets changed and rearranged often.
In addition to listing the goals and how much I need, I keep track of the progress I’m making toward each goal, as well as how much each goal is receiving each month. So if, for example, I need $5,000 for a new heat pump and I’ve got $2,500, I note that down. I also note that $50 per month is going to that fund. I do this for every goal, tracking how much I have, how much I need, and how much I’m dedicating to the goal. I update the list every month, adding or subtracting my progress as needed.
I also update the goals themselves every month. For example, saving for retirement is on there and not going anywhere any time soon. It will be number one on the list for the foreseeable future. But the car goal will likely drop down in a couple of months. We will buy a car and then that goal will drop down toward the bottom of the list. I’ll still be saving for the next car, but because it will not be needed for a few years, that goal is not one to which I want to dedicate a lot of money to in the near term. Instead of saving $100 per month toward that goal, I may drop it down to $10 and something else will move into that second spot. I reassess my needs each month and see which goal needs to be moved where on the list.
When we have an income increase or decrease, I change the list, as well. If I can dedicate more to a goal, or add a goal, I do it. If income decreases, I adjust the goals and amounts downward to reflect the change. The goal list keeps pace with our income, ensuring that whatever we’re making is being allocated wisely.
Your list will look different from mine because you will have your own goals. Most people start out by saving for their emergency fund. The key is to sit down and list out all of the things you want to accomplish financially, determine how much you need for each goal, and then figure out how much you can allocate toward each goal. Update the list as your goals and income change. Keeping the list in a prominent place and keeping it updated makes your goals obvious and real and gives you a better chance of reaching them than just saying, “Someday I’d like to…”
(Photo courtesy of Larry Wilder)
Until it is written at the top of a page a thought is just that, a thought and maybe a wish. Write it down and it becomes a goal, then it is possible to start writing down plans to achieve that goal.
I love having goals and especially measureable ones, but I was stunned the other day when my son pulled out his very specific goal list and showed me. Someone’s goal list tells you a lot about a person and his list made me proud to be his mom!