What are your financial goals? Are they well-defined? Do you have a plan for achieving them? Answering these questions can be tough, but it’s an essential first step toward effective financial planning.
Here at Everyday Money, we are passionate about helping individuals, couples, and families reach their financial goals. We know how it feels to watch your net worth grow, see your debt disappear, and reach that point where you can buy your dream home or retire. Our budgeting tools and advice can help you achieve your financial objectives, but only if those are things that you truly want. Your personal motivation is the most important factor in the equation.
Internal motivation is the key to financial success
You know the old saying about leading a horse to water? Well, the same thing applies to financial planning. All the financial advice in the world can’t truly help you unless you have the motivation to apply it. And to get that motivation, you need to have financial goals that you care about.
What do you really want?
So what are your goals? How do you even figure that out? Discovering your financial goals often involves something counterintuitive — looking at your money from an emotional standpoint. Sometimes it’s essential to deal with your finances in a detached, unemotional way. But when you are trying to figure out what your goals truly are, that emotional perspective is vital.
For example, maybe you feel passionate about your family. You dream of raising your kids in a beautiful home or enjoying visits from the grandkids in a place where you feel comfortable. Or perhaps your financial dreams revolve around being able to send your children to college without student loans.
You don’t need to have a family to build these sorts of emotionally charged goals. Maybe you dream of retiring early or becoming financially independent and traveling the world.
The first step toward making a financial plan that you can actually stick to is figuring out what your goals are. Without that internal motivation, most people eventually just get bored and give up. Who cares about a Roth IRA if it’s not connected to some meaningful goal that you’re trying to achieve? Take the time to talk with your partner about your finances and figure out the goals that you’re truly excited about.
Making a plan to meet your financial goals
Once you have a firm grasp on what your financial end goals are, you can start figuring out how to achieve them. This is where financial planning comes in. A financial advisor can help you figure out the path that leads to your goals.
In most cases, a solid financial plan is a series of smaller steps. For example, let’s say your goal is to be financially independent. That’s an excellent end goal, but it doesn’t really give you a firm set of things to start doing today. To reach that objective, you need to start by minimizing your debt. Maybe your first mini-goal is paying off your credit cards or your student loans. Once you’ve achieved that, then you can move on to the next part of the plan, like expanding your investments or maxing out your retirement contributions.
Making and following this type of step-by-step financial plan may seem frustrating, especially if you are more of a big-picture thinker. But for most people, planning and focusing on individual steps is far more effective than working toward something that’s years or even decades away. Spending your time and energy on the immediate steps, like paying off your credit cards, is a good way to maintain your motivation and avoid feeling overwhelmed or defeated.
Start with small steps
If you’re ready to manage your money effectively and see how much you can benefit from a comprehensive plan, the first step is to identify your financial goals. What do you truly want? Allowing yourself to think emotionally about your finances can help you clarify your values and priorities. Talking honestly with your partner about financial priorities can help you figure out how to move forward together.
Once you have those big goals, you can work with a financial planner to make a step-by-step plan to meet them. Creating those smaller stepping stones means you don’t have to try to plan for every eventuality. You just have to focus on the next step.
If you and your partner have clear goals and are ready to move toward them, we can help! Check out these free Everyday Money resources to get started, and then use our BudgetingBlocks™ system to get a firm grip on your household finances.