Following the breakdown of creating streams of income and how to manage your profits, it is important to start creating a plan based on your financial goals. Whether you want to vacation in Florida or buy the UGG Tasman Slippers, these are goals that you have for spending your money. In order to avoid debt or mindless spending, you can learn how to organize a spending plan for your money. Utilizing these methods will set you up for financial success, and maybe even the ability to go on that vacation!
Step One: Determining Your Values
So you’ve got the money, now what? Well, goals put you one step closer to action, but you have to determine what your values are before writing out your goals. When you write out, for example, that you want to be free of college debt you can’t expect this goal to become a reality without achievable sub-goals. Like baby steps, you have to break down the small movements that will lead you to the big movements, like running. David Bach, a successful financial expert and coach, uses a ladder diagram in his novel “Smart Women Finish Rich” to help his readers determine their values and build goals specific to who they are. Keep in mind that values are basic aspirations—freedom, fulfillment, confidence, security, growth, etc—that reflect your desires. Dig deep when you’re filling out your ladder, it’s important that you will be motivated by these values. Use the diagram below to narrow down what you find to be important about money.
Step Two: Writing Your Goals
Goals come in all shapes and sizes. They’re different for everyone and that is perfectly fine! Some goals are made to take a few years while others can be accomplished in a few months. So, when writing out your goals, keep in mind a timeframe, but don’t let it limit you or put you in a position where you feel stuck. David Bach has his readers specify their five most important goals over the next three years. If this time frame isn’t suitable for your goals, feel free to customize it to your liking! When writing your goals, ensure they are specific, measurable, and provable. Consider factors such as cost and the rollercoaster of a ride that life can bring you when you least expect it. Consider the challenges you may face and what your support team will look like. How quickly can you take action? What strategies will you utilize when faced with challenges? Examples of goals may look like this: travel the world, pay off college debt, purchase your first home. These three goals all vary in cost and the length of time it will take before being accomplished. Once you have your specific goal written down, add a date and average cost. Then, add a list of challenges you may face and your strategies to overcome them.
Finally, don’t fret! You are more than capable of achieving the life of your dreams. Remember that small steps are still steps, and it’s important to keep going. Start with determining your values (specific to money) and then create your goals. Writing them out on paper will make it real, but action is the most important step! These lessons are created to help you navigate through your financial journey.
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