Wealth Mindset Series: 3. The Importance of Financial Goal-Setting

Welcome back to our next step in the Wealth Mindset journey. To quickly recap, here are the steps we’ve taken so far in our journey:

Article One: Abundance Thinking

Article Two: The Power of Delayed Gratification

Today, let’s create the blueprint by identifying objectives and setting goals…

Imagine jumping into your car to head somewhere you’ve never been without directions. What roads and highways will you take? Is there traffic ahead that will delay your arrival? What’s the fastest way to get there? These problems are all solved with your handy GPS. Interestingly, we would never start a car journey without getting directions, yet many of us live our financial lives without GPS. As Lewis Carroll famously said, “If you don’t know where you are going, any road will get you there.”

Having a financial plan can provide clarity and intention. With a plan, you know where to go and how to get there. You can better identify opportunities (the things to say yes to) and remove distractions (what to say no to). Whether your goal is to climb the corporate ladder, start a side hustle, or become an entrepreneur, having a clear plan can guide your decisions and actions.

Before You Build

Before we start building anything, we want to make sure we are headed in the right direction. 

Start by defining your financial goals. These goals should be specific, measurable, achievable, relevant, and time-bound (SMART). 

For example, instead of saying, “I want to save money,” specify how much you want to save and by when. Let’s look at what an example of this looks like. We’ve set a goal to save $20,000 towards the down payment on a new home. We will incorporate the SMART method for this goal:

1. Specific: “I want to save $20,000 to use as a down payment on a house, which will help me secure a mortgage to buy my first home.”
2. Measurable: “I will save $833 each month and track my progress by opening a separate savings account to deposit money into monthly. 
3. Achievable: “I’ve review my budget to identify ways to reduce expenses to help consistently save $833 per month. To increase my income and reach my goal faster, I will look for ways to leverage my skills to create additional income.”
4.  Relevant: “Saving for a down payment is critical to my goal for family stability, as we will have a home we raise our children, engage in the community and start our path start increasing our net worth through home ownership.”
5. Time-bound: “By following this plan, I will have saved $20,000 in 24 months. When I receive bonuses or additional income, putting this extra money towards my new house account will accelerate my savings to achieve my goal faster.”

Creating Your Financial Roadmap

Once you have set your goals, create a roadmap to achieve them. This roadmap should include specific actions you need to take, such as: 

• Reducing unnecessary expenses — Outside of housing, food is one of the main categories where most families overspend. While fast food and Uber Eats can save the day on those lunch breaks and busy evenings, taking advantage of these too often instead of cooking your meals at home can slowly inhibit cash accumulation toward future financial goals. 
• Increasing your income through additional work or investments — Is it time to finally start moving forward with that business idea? Or perhaps it’s time to invest in building your skills to increase your earning potential (we will discuss this more in the next wealth-building principle).
• Setting aside a certain amount of money each month to sacred accounts — Designate accounts for specific goals such as emergencies, new investments, or a down payment on a new home. Some savings accounts allow you to create “buckets” to label funds for these specific goals without opening multiple bank accounts.
• Regularly review your progress and adjust your plan to stay on track.

Financial goal setting also involves understanding your current financial situation. This means knowing your income, expenses, assets, and liabilities. Use this information to create a budget that aligns with your financial goals. A budget helps you control your spending, save more, and invest wisely.

Staying Motivated and Focused

Achieving financial goals requires discipline and persistence. Stay motivated by regularly reminding yourself of your goals and their benefits. Visualize your success and celebrate small milestones along the way. Surround yourself with supportive people who share your financial aspirations and can provide encouragement and advice.

Remember, financial goal setting is not a one-time event. It’s an ongoing process. As you achieve your goals, set new ones to continue your financial growth. By setting clear financial goals and creating a plan to achieve them, you can navigate your financial journey with confidence and purpose. 

Stay tuned for the last installment of the Wealth Mindset Series. 

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