The Importance of Financial Goal Setting
2018 is now in full force, and it’s time to get a grip on the upcoming year.
During the happy season, it’s easy to get carried away with spending and swiping! By all means enjoy your holiday, I know I did a far amount of spending. Now with March looming it’s time to rein it in and get back on track.
I can’t emphasise enough the importance of goal setting. It’s been drilled into me as a young sporty spice. When it comes to money, I will set myself yearly goals and break these down into months. I then break this down to weekly, which aligns with my current pay. I’m also conscious that other areas of my life need to be somewhat in order. If my work schedule is overloaded, I may skip my morning HIIT class, or buy breakfast, lunch and dinner on the run — suddenly a costly day at work. Motivational speaker Zig Ziglar sums goal setting up quite nicely. She agrees that financial goals are important but without goals in spiritual, family, career, social and health, financial goals are often challenged, always put at the end of the list.
With New Year's Resolutions failing majority of the time, let’s start fresh. My challenge for you is to write down your goals for this year. Career or business related, or around family and travel. It can be a mixture of many things, but what they do need to be is SMART Goals. Yes that’s right, flashback back to primary school. SMART Goals stand for Specific, Measurable, Achievable, Results Oriented and Timely.
Some Examples of Smart Goals:
By March 2019 I want to have a $36,000 deposit for a house. To do this, I must have $36,000 in my savings account which is $3,000 per month.
To save $10,000 in six months to travel to Bali to take part in a Yoga Course #wellness.
By November 2018 I want to have my Builders Qualification fully ticked off, and have $7,000 in my bank so I can start contracting myself out. By October, I want to have an understanding of what a contractor can claim for his business and how this is different to an employee
Setting realistic goals are important, no one wants to fail but being pushed outside ones comfort zone is equally as important. If it’s saving for a house, hold tight for my upcoming post on how to reach your home deposit, it may be a lot more realistic than you think.
If your 2k18 goal is financially related, it’s important to know what your income and expenses are.
Simple for some, a little harder for those contracting or self-employed. If you are the latter, you need to have a clear idea of the peaks and troughs of your income. Keep an eye out for my upcoming tips for those who are self-employed or contract workers.
To break your income down it’s a simple equation: Take your yearly salary (if you have any extra forms of income like renters add this on here) and divide it by 52 to get your weekly income.
This is what counts. Check out The Money Myth That Trips Everyone Up for a good break down on how to calculate your expenses.
To reach $##,### in six months, I will break it down to a simple 26 weeks. I need to put away $## per week.
Everyone has “the musts”: rent, rates, insurances, and mortgage repayments. Then the general non- negotiable household expenses: Internet, power, petrol and gas. Minus these expenses from your income and see what your left with.
From here you now have your weekly income to spend at your discretion. $## per week to spend on yourself. Food, coffee, entertainment, gym memberships, spotify, clothing and everything else that your disposable income has gone too over your past.
Money is purely maths and temptation. Remember there is balance in life, but achieving goals is life changing, and the journey that you take along the way!
Once you’ve sorted this, move onto my #1 Monthly Challenge - Make Your Own March - link here
- Set yourself SMART GOALS
- If it’s a savings goal then break this down to align with your pay frequency
- Download the Spending Template to see where you can cut down on expenses: Download here
- Challenge yourself to set a goal and keep track of this each week.
- Pro Tip - write down on paper what you spend your money on each week
- Make Your Own March: Start your challenge here