Financial Goals Help You Stay Motivated

Even if you are financially fit, you might be missing a key component of staying that way. The big motivator for me is having goals. This is true whether you are talking about exercise, eating healthy, or getting your finances in order.

Finances are not a simple task that can be done and simply checked off the list. And with any long task that is ongoing like personal finance, it can be quite difficult to stay on the horse and continue each and every day, following through on what needs to be done.

Goal Setting

In order to make it easier to follow through, it might help to apply some of the more common ideas about goal setting to your finances. There are tons of websites and resources available for this, so I encourage you to read them and seek them out, but I will also provide a couple of simple examples below.

The main part about goal setting that is easy to miss is the idea of a reward. That is, often times, people feel like they need to accomplish this monumental task and then when the task is completed, they should simply move on to the next one. I think that this kind of mistake is easy to make and also easy to avoid if you watch out for it.

Types of Goals

Stretch Goals: Given that we want to have good goals, it also helps to have several goals over different time spans. Some goals are “stretch” goals that are difficult to achieve and are setup merely as a height that you want to aspire to. Getting the goal completed is not the point here; the idea is simply to improve.

Dated Goals: Other types of goals include dated goals. From ultra-short-term to ultra-long-term and everything in between, these types of goals can give you some focus while allowing you to really grow and develop yourself financially.

Targeted Goal: Another type of goal is a targeted goal. This goal might be different than a timed goal where the goal is to do something in a certain amount of time. Instead this one focuses on an actual target and is less concerned with the amount of time that it takes to get there.

Financial Struggle Reaps Rewards

Of course, like any type of exercise, financial exercise can be exhausting and draining so it is important to give yourself some breaks. These breaks come in the form of either “time off” or “rewards”.

A reward for reaching a goal can be a discretionary purchase that you don’t really want to have to justify — you just want to purchase something fun that you really want. If this is the case, I think that spending perhaps 1 or 2% of your monthly income on something fun as a reward for yourself is a good benchmark. Make sure to pay cash though; it makes no sense to go into debt for a reward.

Time off is another type of reward. So, instead of pushing forward on your goals, you might give yourself a month off where all you do is really just live your life normally and focus on “breaking even” with your finances and don’t worry about making more financial progress. This may not be perfect in everyone else’s eyes, but it might be a reasonable thing to do if you’ve been really buckled down for a year or two paying off debt.

Setting Financial Goals

For many people, a major goal is to pay off debt. Personally, I have been doing this myself and with each bill that gets completely paid off, I take a small amount and buy something fun for myself. For me, each bill being paid off is a targetted goal and once it is reached, I get a rewards.

I’ve also set certain goals for being prepared financially. This year, I decided to make sure all of my insurance needs are taken care of. Next year I will likely deal with a will and trust. Working in this way gives me more flexibility with my time and money that I need in order to accomplish these and keeps me from procrastinating.

Now that you’ve seen a couple of my examples, try setting a financial goal or two of your own. You might be surprised at how having a goal can motivate you toward positive change with your money.