What’s with Financial Goals and How I Set Mine

When I was working for an MNC, I had yearly goals set by the management, and I did very well on them. I realized that I do better when I know what the end result should look like (more or less). That is a huge motivation for me.

I have not always been a goal oriented person, but ever since I started setting personal goals for myself, I most likely achieved them. 

Get out of credit card debt. And I did.
Start a blog. And I did.
Write a novel and publish it. And I did.
Go on a vacation. And I did.

We are already six months into the year. That means it’s time to look at my goals for this year and see how I am doing. I was talking to a friend about it, and she was a little amused that I had a financial goal and was curious about how I set these goals and achieve them. So here I am sharing what I do and how.

Why should I even set a goal? Why does it matter?

Goals allow dreams and wishes to become reality.

I write down exactly what I want to have, financially speaking, by the end of the year.
I actually use paper and pen to write them down. It may be old school, but I need to pen these goals down in my diary. They may and probably will change, but I write down everything I want to achieve. This makes me feel connected to my goals and gives me clarity on what I will be working towards and not doing random things. While writing these goals, I like to be as clear as possible, so it takes a few drafts before these goals are finalized. It also helps imprint these in my mind.
Writing my goals forces me to look at them objectively and clarify the ‘hows’.
I also like to keep them positive. So I instead of writing I will not spend money on shoes; I write, save money for XYZ and buy only what I need.

A funny thing started happening when I consciously started writing my goals; I actually started spotting opportunities that helped me achieve my goals.  

Fun fact: According to research, you are 42% more likely to achieve your goals if you have them written.

Once I have my goals I set exact dates against them in pencil. Then I work back and start breaking them into monthly, weekly and even daily goals. Once I am confident about the dates I put them in pen and make it official.

For example, when I was working to clear my credit card debt, I said I’ll pay off the entire bill by the 31st of August 2013. Then I worked out how much I needed to pay every month to make sure I met this deadline. That gave me an exact figure of 7,628 INR that I needed to pay every month for the next few months. And when I got an unexpected bonus I was able to clear it faster.
Having the clarity of what I owed and why I needed to get rid of that debt helped my take the decision of using my bonus and clearing my debt before I did anything else with that money.

Similarly, when I wanted to buy a car in 2014, I researched what is the down payment required and worked out how much I need to save to make that purchase. I was able to buy a car by May of 2014. Of course I had to sell it before I relocated. :-(   

When I started putting dates and amounts in front of my goals they didn’t look as daunting. Plus, it also helped keep a track of how far I have come. Some goals were not achieved on the pre-decided dates. But that was okay. I knew why I couldn’t. I also knew what exactly needed to be done to get where I wanted to be.

The first time I set goals for myself, I made the terrible mistake of having too many of them. That diluted my focus and made it stressful at times. That’s when I realized the importance of reviewing and reassessing my goals often. My advice is, don’t spread yourself too thin.
Have about 4 to 5 goals, tops. This also allows us to be realistic with our goals. I like to give myself goals that are a little out of my comfort zone and my immediate reach. There is no fun in plucking low hanging fruits, now is there?

But I like to keep a mix of some easy goals too. Particularly in the middle of the year. Beginning of the year, I am pumped which gets me going. But in the middle of the year, I have come to realize that I tend to lose steam. So having some easy goals which I know I’ll achieve, gives me the much-needed motivations to get me through till the very end.

I recently heard Dani Johnson give this analogy of ‘Pie in the sky.' It goes something like this; if you say you want to bake a pie, that’s just in the sky. You need to know exactly what you need to do to get that pie out of the sky and on your dining table. You need to know the ingredients, you need to go and buy those ingredients, you need a recipe, you need to follow the recipe and bake the pie. And there you have it. Pie, out of the sky and on you dining table.
That drives my point home. Be realistic and brainstorm ideas and habits that will get you what you want. Often we get overwhelmed by the big picture and avoid achieving that goal. But when you break it down into small chunks it becomes easy, practical and most importantly doable.

To wrap this up:

  • Make S.M.A.R.T goals [i.e. Specific, Measurable, Attainable, Realistic, Timely]
  • Have short, medium, long-term goals
  • Prioritize each of these goals
  • Keep them alive by looking at them & reviewing them periodically
  • Align your daily actions with these goals
  • Have milestone goals that will help check if the goal is too simple or unrealistic.
  • Break it down into actionable items you know how to do. And the ones you don’t, start educating yourself on them.


Bonus tips:
# Surround yourself with your goal and tap into that feeling that you will have once you achieve it. (This one is a big motivator for me.)
# Remind yourself every day and look at your goals every day.
# Hold yourself accountable to someone. Share your goals with your trusted one who can help you stay on track with your goals.