The #1 mistake most people make when setting their financial goals is not making their goals a priority.
Too many times, you’ll set a financial goal, such as saving for retirement, saving for a down payment or saving for a vacation, and you’ll wait and see how much money you have left over at the end of the month before putting anything toward savings.
Nine times out of 10, you’ll realize there is nothing left to save and you’ll repeat the cycle month after month without committing anything toward your financial goal.
When my husband and I committed to paying off $45K of debt, we made our financial goal a priority and that meant deciding on an amount we could afford to put toward our debt every month and treating it like a non-negotiable bill that had to be paid above everything else.
Except for our rent and utilities, our debt payment was paid first above all other expenses, including gas and groceries, dining out, clothing, entertainment, etc.
When we finally paid off our $45K debt in 45 months, we used that same mentality to save $50K for a down payment in less than a year. It’s a lot easier to save money when you don’t have debt bringing you down.
If you’re looking to set some financial goals and are wondering why you’re having such a hard time meeting your goals, here are some tips on how to meet your financial goals.
Pay Yourself First
You will never meet your financial goal if you don’t pay yourself first—this means contributing a set amount every month toward this goal and making it a non-negotiable.
Choose an amount that will be a challenge to reach, but won’t leave you destitute in other key budget areas like groceries and transportation. If you feel like there is just no way to find any “extra” money to put toward your goal, start by cutting your budget 5% across the board, and then putting that 5% toward your goal.
If you’re like many people who dip into their savings accounts whenever you overspend, open a new savings account that is not tied to your everyday banking account.
My husband and I have an online savings account that is connected to our checking, but takes three days for transfers to go through. This three-day wait period was the perfect solution to ending those “But I really need this purse/fancy dinner/vacation/shopping spree” moments.
Break Down Your Goal
Committing to saving $50K for a down payment can seem absolutely mind boggling, but it also seemed impossible when we thought we’d never get rid of our $45K debt, slowly and steadily, we did.
Make your really big financial goals feel more attainable by breaking them down into smaller more manageable goals. Whether it’s allowing small celebrations each time you reach a new milestone, such as 25%, or treating yourself to something nice and inexpensive like a new book, a mini date night, or a new nail polish, small treats to celebrate our mini accomplishments help us remember why we’re working toward our goals.
Set a Target Date
A goal without a deadline is just a dream. Give yourself a timeframe. When we set out to pay our $45K debt, and with my husband only making minimum wage when we initially set our goal, our timeline said it would take us 5 years to pay it off. So imagine my surprise when we were able to pay off our debt more than a year early.
It was sheer will and determination that kept us going. We stuck to our goal of becoming debt free, but we also allowed ourselves some vacations to keep our sanity and serve as a reminder as to why we were working toward a debt payoff goal in the first place.
Sticking to financial goals can be incredibly hard, but it’s always important to be working toward something. I am constantly amazed at how many people live paycheck to paycheck without having adequate savings for an emergency, or for other important financial goals, like buying a house, or buying a car.
Setting a financial goal doesn’t have to be a punishment and actually can make you feel like you’re money is finally really working for you.