The keys to having a happier and more secure financial life sound easy, in theory. Set up a budget and stick to it. Have frequent money conversations with your partner. Know your money values and let them guide your financial choices.
Spoiler alert: these tips won’t work unless you’re honest with yourself. To get your financial ducks in a row, you have to be honest about your spending. How much you save. What you know about investing or retirement accounts. Your willingness to change your financial habits, if needed.
Most of all, you have to be honest about your money goals. Do you truly know what you want, or are you choosing the wrong money goals for yourself?
What you want vs. what you think you want
A study by investment research firm Morningstar asked participants to write down their top three financial priorities. Then, the participants were shown a master list of goals prepared by the researchers. Three out of four participants changed at least one goal after seeing this list. One out of four even changed their top priority.
What does this mean? People often don’t really know what they want. The money goals that people set for themselves and what they truly want can be very different.
The money goals you set can be affected by a number of things. Like where you are in the current phase of your life, for example. You may be preoccupied with buying a new home right now, even though your money goal of living life comfortably in retirement is still just as important to you.
Emotions come into play, too. How you view and treat money will affect the goals you set for yourself. If you grew up in a household where money was tight and not to be discussed, you may set a goal of “making more money” or “saving more money” for fear of running out of it.
How much money is “enough” money, then? Having more money shouldn’t be treated as an ultimate goal, but rather a tool to accomplish more specific goals, like padding your emergency fund or treating your family to a special dinner once a week.
How to audit your own goals
It’s time to check each of your goals to see if they reflect what you really want. Take each of your goals at face value and dig deeper. Ask yourself why you set this goal. Is your goal of making a certain amount of income rooted in fear of being broke? Is your retirement plan borne out of a wish to live a certain lifestyle? Why does this goal matter to you?
Your goal of saving for your child’s college fund isn’t simply to send them to college. It may be to give them opportunities you didn’t have at that age. Likewise, your goal of buying a new house isn’t just about investing in real estate. It’s about having a safe, comfortable place to live where your pup can run around in the backyard.
Financial goals are often rooted in values and ideas that aren’t so easy to measure with numbers. (How do you put a dollar amount on “opportunities for my kids” and “a nice place to raise a family?”)
Uncovering your reasons for setting goals can be scary, because being honest with yourself can be scary! But it’s essential for setting realistic goals and developing a plan to accomplish them. Goals that are tied to your emotions and values can help you stay disciplined. It can also feel much more personally and emotionally fulfilling when you achieve one of them.
Be thoughtful and honest about your goals
Reflect on the money goals you’ve made, and you’ll learn:
- Your money values, or what’s truly important to you.
- That when used as a tool, money can help you achieve your goals, but it shouldn’t be the ultimate goal.
- Your financial goals are tied up in emotions…and that’s okay.
- Being honest about what you want can help you create a better financial plan.
This mindset shift may not happen overnight, but stick with it! You’ll learn more about what matters to you and how money can help you build the life that you want.