If you’ve read The Importance of Values and completed the exercise to identify and prioritize your values, you are now ready to set and prioritize your goals. Your goals should line up with your values, else you will have a very difficult time staying motivated to reach the goals you set.
What Are Goals, and Why Are They Important?
A goal is a specific result you are working towards achieving. Goals help you focus on a final destination for all the hard work you are doing right now. We constantly live in the present – focused on the here and now. Unless we find a way to visualize the future, we are easily distracted and sidetracked from achieving our goals. Clear, specific goals help us keep that picture of the future in our mind so we know why we are making the right choices today. As J.D. Roth says at Get Rich Slowly, the road to wealth is paved with goals.
What Makes a Good Goal?
Good goals with a high chance of success have certain attributes in common. When you write or verbalize a goal, you should make sure it meets the following two criteria:
Specific – A goal should specifically state the desired result (What?), a time frame (When?), cost (How Much?), and the personal value it aligns with (Why?).
Realistic – A goal should represent an end result that you are willing and able to work towards. This does not mean that you should not set high goals, but you must know if you can truly accomplish your goal. Setting unrealistic or impossible goals could mean you are preparing yourself for failure.
If you’re not sure a goal is realistic, go ahead and do your best to achieve it. Just because a goal seems out of reach does not mean you cannot accomplish it. If you find out your goal is much too ambitious, you can always scale it down in the future.
List Your Goals
Although you certainly aren’t required to have written goals, it helps a lot to write them down on paper or electronically. I personally use a single Google Docs Spreadsheet to track my budget, net worth, and goal progress on separate pages.
To start off, just list all the financial goals you can think of. This may include some more personal goals that will affect your finances, but you should be sure your goal can meet the two criteria above. Don’t worry too much about having the “right” goals at this point – just list them all.
Eliminate Conflicting Goals
You may have listed some goals that are conflicting. For example, if you listed “Buy a new car for $30,000 next year” and “Eliminate $30,000 of credit card debt in the next twelve months” you could have conflicting goals! You have to decide which goals are the most important, focus on those, and eliminate the rest.
Prioritize Your Goals
Next, you’ll need to figure out which goals are the most important in terms of their value to you and how soon they need to be accomplished. For example, establishing an emergency fund of at least $1,000 before you focus on paying off debts is important because it will keep you from taking on additional debt if a need arises suddenly (car repairs, unexpected bill, etc.). You may be able to prioritize your list without any tools, but if you need some help I recommend CNN Money’s “The Prioritizer” calculator. It’s a fun and quick way to prioritize any list of items. Just remember to keep asking yourself which goals are most important and need to be accomplished first as your prioritize.
Commit to Your Goals
Once you’ve narrowed down and prioritized your goals you must commit to achieving those goals. The best way for most people to do this is to put the goal in writing. You will also want to figure out a way to remind yourself about the goal every day and find ways to motivate yourself to achieve the goal. Share your goal with someone close to you who will be supportive and provide you with accountability. Focus on the positive effects of achieving your goal when the going gets tough (and it will get tough). Most importantly, do whatever works for you to keep your motivation up.
Don’t Give Up!
No matter how hard you may be working at achieving your goals, it’s likely you’ll run into some roadblocks along the way. Don’t give up! Unless a change in your situation necessitates an adjustment to your goals, stick to the goals you set. Think about why the goal is important to you and what it will mean to you once you’ve accomplished it. Saving money and paying off debt are going to be hard because they require you to change long-held habits and demand some sacrifices. However, you have to keep in mind the freedom and peace you will have once you accomplish these goals! Our brains are not wired to think long-term, so this won’t be easy. Do your best to remind yourself every single day why you set your goals and why you want to achieve them. With time and discipline, you will accomplish your goals!