Guess what? Now that you’ve completed your financial snapshot, you are so much more in control of your money than ever before. You heard. In control. In the driver’s seat. El Jefe. The Boss. You are ready to tell your money where to go and how to get there, literally.
What’s that you’re asking? How? How do you tell your money to do what you want? Goals. Yes, I said it. Goals. Just like your guidance counselor told you. It’s time to talk effective goal setting. You and your honey get to sit down and paint your financial future…sky’s the limit.
Goals Flow From Your Values
I believe in values based goal setting. You and your spouse really need to focus on identifying your values as a family. Values are simply things in life that are important to you. Now, I’m going to take a wild guess and say that, if you’re in a committed relationship with someone, you chose that person because your values align. As you both work through your financial goal setting, it is very important that you both take time to address your family values.
For example, imagine that providing your children with the best education you can provide is important to you. If part of that means paying for K-12 private school tuition, then I would expect that you adjust the rest of your spending to accommodate that value without overextending your budget. You may have to prioritize your spending so that you drop your gym membership or put off the purchase of a new car. Does that make sense?
Setting Money Goals
We have two very real truths that operate in goal setting. The first truth is that we all have unlimited wants. The second truth is that we have limited resources (read: time and money). What you and your honey have to do is sit down and decide what you both want to be able to accomplish individually and as a team. For lack of a better way to explain it, it’s like putting together a financial bucket list. Grab a sheet of paper for each of you and individually brainstorm your own money bucket list. Don’t worry about the how right now, focus on the what. Think about what you would like to be able to do with your money. Here are some ideas:
- Save to buy a house
- Pay down debt
- Save for retirement
- Save for college
- Go on vacation
Got it? Good!
Establish A Timeline
There’s a saying that defines a goal as “a dream with a deadline” and I wholeheartedly agree. Think about it. How likely are to work towards something without a fire lit under your booty? If you’re anything like me, you’ll talk a big game, but some how things will just get in the way. It’ll stay on your mind, and you’ll think about it from time to time, but you won’t make any real progress. For me, the key is creating the deadline, even if it is a bit broad. It’s great if you can nail a deadline down to a specific date, but all you need is to name a length of time be it weeks, months, or years.
When it comes goals, we typically have two types: short-term goals and long-term goals.
Short-term goals are exactly that. They’re goals that you can accomplish in a relatively short amount of time. In the financial goal-setting world, I would define this as goals you can accomplish within a year. Long-term goals require more work than and resources than the latter, and could take a couple of years or last a lifetime. You could argue that short-term goals lead up to long-term goals. Short-term goals are often the baby steps that lead you along the path to successfully accomplishing your long-term goals.
As a military family, we establish financial goals for the duration of each of our assignments. For now, our assignments have averaged about 3 years, so hubby and I set goals for our emergency savings, project furniture replacement schedules, examine our next car purchase time line, and identify any raises or promotions that might occur and begin discussing what we will do with the extra funds <insert evil laugh here>.
Make Your Financial Goals Specific
Get ready to get down to the nitty gritty with your goals. The more specific you can make your goal, the easier it will be to measure your progress towards your goal. It isn’t good enough to say, “I want to buy a house.” You have to take it further. You have to paint the picture so that your mind’s eye can see it. Not to rip off R. Kelly, but “if you can see it, then you can do it.” There’s something to that. Try these examples on for size:
- In 10 years (2022), I want to have a 20% down payment to apply towards the purchase of a 2000 square foot home within the Triangle Area in North Carolina.
- In 4 years (2016), I will pay cash to replace my 2003 car with a 2013-2015 old hybrid car.
- In 1 year (March 2013), I will save $4000 to cover the spending money and travel expenses for a family vacation on 7 day Eastern Caribbean Cruise.
- In 2 years I will pay off $15,000 in various debts in order to become debt free.
Write Down Your Goals
Simple, right? Not only is it not enough just to think about your goals, you’ve got to write them down. Writing down your goals makes them much more tangible, more real. Have fun with the process! Use strategically placed sticky notes or write yourself motivational reminders on your bathroom mirror with dry erase markers. If you’re paying down debt, make a payment calendar so that you can mark off each payment as you make it. Whatever floats your boat.
Start Working On Your Goals ASAP
Once you and your spouse refine your very specific goal list, start taking action immediately. Take your goal list and compare it to your spending analysis and budget. Is your current spending going to help or hinder your progress towards your goals? What changes are you both willing to make to start working towards your goals? Do you need to increase your income by returning to school? Are you hoping to buy a house but haven’t taken a homebuyers class? Jump on it! Find a way to act on your goal and strike while the iron is hot.
Are you working on any goals? What do you do to make your goals a reality? What is the most significant goal you’ve accomplished or are accomplishing?
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[...] Either way, you’ve opened up the door to communicating about money. By understanding how you spend, you can start doing some deep thinking about why you spend the way you do and whether or not it is in alignment with your values as an individual, couple, or family. Of course, this leads us to our next money-honey post and the topic for the next conversation with your honey: Setting Money Goals. [...]