What would you do if money were not an issue for you?
What would you buy? Where would you live?
Setting financial goals for your life doesn't have to involve complicated spreadsheets. In fact, we have developed a simple system to make our income work for us. We've used this system again and again over a decade with amazing results.
Setting big goals and working day in and day out to accomplish your goals is not easy. It takes a lot of grit and perseverance.
Often times when people are in financial stress, the first thing they focus on is a budget. Which one should we use? Which one is better?
They may even turn on spouses or kids, blaming others for their financial storm.
In his book the Miracle Morning, Hal Elrod says
"those who overcome mediocrity.....have an extraordinary compelling why that drives them"
Yes, a good budget will help you see your overspending and it might help you organize your financial life, but good budgets don't turn bankrupt families into millionaires.
Your "why" is what drives you to accomplish goals with money. Don't get me wrong, budgets are important. Everyone needs a good plan and plenty of encouragement, but your systems only support you.
Your "why" will drive you.
So how do you create a compelling "why"? Here are 5 steps we use frequently to get our brains thinking and dreaming about what motives us to move forward.
DREAM + THINK
Take some time to dream and think about life. Find a quiet spot away from kids and life. You could do this early in the morning before anyone is awake. Or put a notebook by your bed and write a few thoughts down every night.
Put things down on paper. Journal if you need to, but make a record of what you want on paper. Writing your goals down is important.
And if you're married, do this with your spouse! You'll be surprised what you learn about your spouse when you listen.
Here are some questions to get you started:
What would you like your life to look like in 10 years?
How much debt do we want to have in 10 years? in 20 years?
How much cash do we want to have in the bank a year from now? 5 years from now? etc.
What would your life look like if you didn't have to worry about money each and every second of the day? Would you......
Buy your dream home?
Send your kids to college debt free?
Quit your job and start your own business?
What job do you want to have?
What relationship do you want to have with your children and spouse?
How much money do you want to be making in 5 years? 10 years?
Where do you want to live?
What places do you want to travel to?
Don't allow self-limiting beliefs to sabotage this time. Don't edit your thoughts. Just write the first thing that comes to your mind.
This is important because we don't spend enough time thinking about the life we want. We are so busy doing, we don't think about where life is going. We want to be proactive, not reactive, with our money.
And remember, big things happen one step at a time. If we don't know what the goal is we will never get there.
Now that you've discovered your "why" and dreamed big things for your life, let's narrow things down. Pick one BIG thing you want to accomplish in a certain amount of time.
Maybe you want to pay off your car and save a certain amount of cash to purchase your next car outright.
Maybe you need to increase your income by a certain amount each year through extra jobs or finding a new job?
Maybe you want to pay off all your consumer debt in the next 2 years and have a 6-month emergency fund finished 6 months after that?
Maybe you want to travel once with your family each year and pay cash for all of it?
Maybe you want a different job or career. Do you need to commit to taking a class and learning about a new field?
Maybe you want to pay off your home?
Maybe you want to put all your kids through college without loans?
Pick your one thing and decide when you want to accomplish it. Give your self a deadline. Be reasonable but don't take too long. Momentum is your friend.
Break down your goals into bite-sized pieces and set deadlines. For example, let's say you have $20,000 in debt and no emergency fund. You've set your goal to pay off all this debt in 2 years and then fully fund a 6-month emergency fund.
You'll need to break this down into manageable pieces by figuring out how much extra money you can pay each month to pay off this debt. You may be able to squeeze out an extra $500 or $1000 per month. You set a deadline to pay off the $20,000 in 18 months.
Once the debt is paid off, you'll decide how long it will take you to save 6 months in cash for an emergency fund. You'll set up a separate savings account for emergencies. Now that you don't have any payments, you should be able to do this relatively quickly.
MOMENTUM IS YOUR FRIEND
Momentum is super important when working towards big goals. It fuels us to do the next big thing.
Merriam Webster defines momentum as
the force that allows something to continue to grow stronger or faster as time passes
It is important to recognize what is going well and acknowledge those things regularly. If you had a win, say it and celebrate it. If you've had some setbacks, learn from it. Use your "why" to push you forward.
This is how momentum works.
For this season, we are homeschooling our 6th grader part-time. He is writing A LOT of papers in his English class. He is learning about the importance of a rough draft and editing.
He doesn't write the final copy of a paper the first time and turn it into his teacher. He makes an outline. Then he thinks about how his paper should be structured and makes a rough draft. His teacher edits the draft and returns it to him. THEN, he makes s a final copy.
The same process is true for crushing financial goals. We think and research. We make a plan, a tentative outline. We try and make mistakes. We have setbacks. We edit and then move on.
A good editing process helps us see mistakes and correct them. We know the process has an end. We have clearly defined steps. We don't quit in the middle of editing. We use the momentum of learning to push us through to the end.
It is only when you got through the ENTIRE editing process, accepting rough drafts as a part of life, that you see progress. Failure isn't fatal.
People who accomplish financial goals aren't perfect, they understand the process of a rough draft. They learn from mistakes and start over. They use momentum to push them forward.
Look for momentum. Recognize it. Use it to your advantage.
I first heard about visualization from the Miracle Morning. At first, I thought it was a little woo-woo for me. I wasn't sure about it.
Visualization is also known a mental rehearsal. You create a mental picture of specific behaviors or outcomes you would like in your life. It is the process of imagining exactly what you want to achieve in life by rehearsing what you'll need to do to achieve it.
I was skeptical.
But a few days later I was driving in my car thinking about the visualization process and realized this is EXACTLY what my prayer life has been. The major things we have accomplished in the last decade have been out of this very process. As I pray each morning, I would essentially visualize what things I was asking the Lord to do in our lives. I realized this isn't as woo-woo as I thought.
Try spending time visualizing your goals in prayer.
What would it look like for you to accomplish this goal?
What behaviors would YOU have to display to make this goal a reality?
Visualization does some important things for us. It keeps our goals in the front of our mind. When I commit to visualizing each day, my goals become important. I might get distracted and busy, but my goals are still important. I don't set them aside. I stay committed day in and day out.
Visualization also helps with behavior modification. To accomplish financial goals (or ANY big goal) we have to modify our behavior in some ways. We need to be aware of purchases or communicate more with our spouse. Visualization forces us to think about what behaviors I may need to change or adjust to accomplish this goal. It makes us accountable.
For more information about visualization, read this.
My husband is all about celebrating. He makes sure we celebrate every win. I am a doer, a taskmaster. I love a goal and a to-do list.
When we paid off all our consumer debt, we made a commitment to take our kids on a big trip to Disney. We paid cash for the entire thing. It was one of the most enjoyable trips we've ever been on. We worked hard to get there. I remember looking at Brad after the trip was over and saying "all those extra jobs we did and coupons I clipped was worth it."
Celebrating is good for the soul.
Celebrating helps us stop and see what we've done. It helps us gain momentum to set that next big goal. It gives us the push we need to work harder and dream bigger.
No goal is too small to celebrate. Decide when and how you will celebrate. Write it down. Dream about it. Do some research and talk about it often.
Travel is important to us so we celebrate with traveling a lot. But maybe you want to celebrate with a dinner out or a special purchase. There are so many ways to celebrate!
Finally, keep going!! Your goals will differ from mine. Your family is different from mine. Take some time to dream and think. Get a notebook or yellow pad and write things down. Don't self-edit.
What ideas or themes come up again and again for you? Pay attention to those things. Those are things that really matter to you.
Pick one thing and break it down into bite-sized, manageable tasks. Give your self a time limit on how fast you'll accomplish your goals.
Use momentum and celebrate, knowing that rough drafts are a part of life!