How to create and achieve financial goals

by Ace on June 2, 2010

Imagine that you’re with a bunch of friends playing laser tag. All of you are running around trying to tag each other with your lasers. Now imagine trying to do this with a blindfold on. When you fire, did you hit the right person? Did you even hit anyone? Needless to say this would be much harder. This is exactly what it’s like going through life without financial goals (okay, well not exactly). Goals will give you the vision of your target and the ability to know if you hit it. This is why it’s so important to create financial goals. Let’s take a look at financial goals, how they are made, and how to achieve them.

Dream about your future

Take a moment and envision the future you want. What is your lifestyle like? Do you travel a lot? Maybe you want to retire early. Whatever it is, let your mind wander. Think about all of the different parts of your life, not just the financial ones. Where do you want to live? What do you want for your family?

Turning dreams into visions

Dave Ramsey author of the Automatic Millionaire, argues that in order to create goals, you first need a vision. The vision acts as a stepping stone to creating an achievable goal. In an interview with CBS Dave said,

We all dream about things. Dreams are almost like wishes. It’s kind of the thoughts you have in the shower, the things as you’re waking up in the morning. “I dream of writing a song.” “I dream of writing a book.” And the vision is “I’m going to write a book.” “I’m going to be a millionaire.”

Although those two statements may seem similar, there is a big difference. Visions give substance to your dreams. They put you in the mindset that it’s just a matter of getting from where you are now to where you want to be later. This is where goals fit in.

Components of a goal

I define a goal to have distinct parts:

Vision – The vision is what I described above. Seeing yourself where you want to be in the future.
Action – The action is steps that you need to take in order to achieve your vision. It is important that this is measurable, so that you can track your progress.
Deadline – The deadline is the point in time that you will achieve your vision.

Write your goals out

I hope that when you read this, you will actually go and grab a pen and paper. Writing your goals down will help you in multiple ways. Not only will it help engrain your goals into your head, but seeing your goals on a piece of paper makes them seem more real. You can use whatever format you want, but I would recommend using something like this, “In <some amount of time>, I will <your vision>. In order to reach this goal, I will <action>”. Do this for each one of your goals, and read it back to yourself out lout after you’re done.

Tracking your progress

In order to make sure that your aim is correct, you will need to check your progress on each goal. When you look over your goals you should be asking yourself these types of questions. Am I on track to achieving my goal? Am I doing everything I can to achieve my goal? Are there any ways I can improve my progress?

One of my goals

Since I brought this topic up, I think it’s only fair that I share one of my own financial goals. In 2 years, I will have a wildly successful personal finance blog that will help people save money, fight debt, and build wealth. In order to reach my goal, I will post excellent content at least 3 times a week, and continue to look for opportunities to improve Ace of Wealth.

So there you have it. If you have any goals that you would like to share, I would love to hear it!

Man is a goal seeking animal. His life only has meaning if he is reaching out and striving for his goals. ~Aristotle

Update: This article was featured in the Carnival of Personal Finance #260 at Rainy Day Saver

(Photo credit: lululemonathletica)