I finished paying off my student loan debt, six years ahead of schedule, and I was able to do this because I structured my financial goals and was clear about exactly what I needed to do to achieve them.
You can also tackle your financial goals! The key is to use real figures, track metrics, and to hold yourself accountable! Follow these 5 steps to set yourself up for success.
STEP 1: What and Why
You need to understand exactly what you want and why you want it. This is your ultimate goal and one that you’ll come back to every time you’re thinking about making a purchase that can derail your progress. Keep these goals specific!
STEP 2: How Much and How Long
Now we talk numbers! You’ve determined what you’re saving for, but now you need to put a figure to your what. How much do you need, and what is your timeframe to achieve this amount?
Here’s what this looks like in action:
Trip to Greece: Consider the cost of flights, accommodation, food, and local activities. Set a goal of saving $2,500 over the next 8 months.
Paying off a credit card bill: What’s the balance and annual percentage rate? Depending on these two figures, set a goal of paying an X amount in the next X months.
Save for an emergency or other non-tangible goal: Determine what constitutes an emergency. For example, this could entail repairing your car after an accident or covering a semester of school if you lose your part-time job. It could look something like saving $2,000 for an emergency over the next year.
STEP 3: The Math
Based on the amount you want to accumulate and your ideal time frame, determine how much money you’ll want to save each month. This is also the place to be realistic with your expectations -- you may not be able to save $2,000 in three weeks on a part-time minimum wage job. However, you might be able to reach this goal in three months, which is why doing the math is a big piece in the process. The math will also provide you with mini goals to hit throughout the process.
If you were trying to work on more than one financial goal simultaneously, you’ll want to add up the monthly/biweekly amounts and see if that amount is realistic for you. If not, you’ll want to prioritize.
STEP 4: Visibility
Once you’ve decided on your financial goal(s), write them down and keep them in a visible spot.
STEP 5: Accountability
Share your financial goals with a friend! You’ll be more committed to completing a project or goal when you’ve told someone else. Your accountability buddy should be a person you trust to call you out when you’re jeopardizing your progress. To make the most of your accountability buddy, set some guidelines such as texting them when you’re thinking about making a purchase that doesn’t align with your goals or when you’ve received extra money.
Remember, the last thing you need to do is overwhelm yourself with too many financial goals at once that you end up achieving none. Review and complete these steps for each goal and determine which you’ll prioritize for the first three months of the year. Good luck!