75: Financial Goal Setting → PLUS Tips On Maintaining Financial Momentum
Financial goals are important as you move toward getting your mind and money in balance. Financial goals are savings, investment, earning, or other money-related tasks and targets you hope to achieve over a set period of time. Actively having ownership over where your money is going is powerful. Setting financial goals is a great way to make sure you take forward momentum in your financial life. Practicing financial self-care allows us to take care of our physical, emotional, and spiritual selves.
In today's podcast, I'll share common types of financial goals, how to break down goals into achievable micro-goals, three things I look for in a good money goal, and two things to help you maintain your progress.
Types of Financial Goals
Financial goals go beyond saving for things or debt paydown, though those can be important. Here are other domains that you can set specific financial goals in:
Financial literacy Understanding more about the ins and outs of your money. Strengthening current areas of financial understanding and expanding on your financial knowledge.
Setting and maintaining a budget Finding a way to track spending in a way that you find easy to maintain.
Spending less than you earn Making sure you have a cushion leftover each month so you aren't living paycheck to paycheck
Debt paydown Making additional payments toward different types of debt like medical debt, student loans, credit card debt, auto loans, or any other type of debt.
Investment & Retirement Understanding which retirement accounts you have or should open based on your needs and ensuring that the investments within those accounts are appropriate for you. Maximizing your retirement accounts and investing outside of them when you've maxed them out.
Saving for a specific thing Saving for things in the short and mid-term like a downpayment for a home, a set of new tires, or a refreshed wardrobe. Emotional, spiritual, and physical wellbeing are often intertwined, and I want you to think about setting goals in this domain if it's important to you.
Emotional well-being Saving for and spending on things that enhance your emotional well-being. This might include things like acupuncture, reiki, or a solo-cation.
Spiritual well-being Saving for and spending on things that support your spiritual self. This might include things like a ceremonial object, upgrading a prayer room, or a spiritual retreat with other people who share similar beliefs.
Physical well-being Saving for and spending on things that enhance your physical well-being. This might include a gym membership, hiring a meditation coach, or buying a new pair of workout shoes.
Life Insurance Getting a life insurance policy (if needed) that will buffer your loved ones from financial heartache if something were to happen to you. This is particularly important where there's a large income discrepancy in a romantic relationship, if you have children under 18 or are responsible for caring for someone with a disability that impacts their ability to live independently.
Will & Trust Legal documents that outline what you'd like done to your physical body, how you'd like to have your funeral, and how you'd like your physical belongings and financial assets to be distributed. Pro tip: If you are traditionally employed, see if your employer offers legal assistance that covers will & trust creation.
Charitable Contributions Considering if you want to start or increase charitable contributions and deciding if you'd like to donate annually or monthly.
Earning More Money Negotiating a raise or landing a new job if traditionally employed, or increasing prices on products or services if self-employed.
Hiring a Finance Professional Finding and vetting a finance professional like an accountant, tax preparer, financial planner, investment advisor, money coach, or financial therapist
Annual Goal Setting
Brainstorm which financial domain you'd like to work on. List out which areas feel most important for you to work on in the upcoming year. Put things on the back burner that don't feel as pressing, and prioritize the areas most in alignment with your current needs. Once you have a domain you want to focus on, get clear about what type of goal you'd like to set for the upcoming year.
Financial Goal Setting Tips
While a SMART goal is great (specific, measurable, attainable, realistic, and time-bound) I think the three most important parts of a SMART goal when setting a financial goal are S-R-T.
Specific Your financial goal needs to be concise enough that you can check it off of a to-do list
For example, Instead of "save more money," "Save $50 a week until I top off my 1-month emergency fund."
Realistic I'm a fan of dreaming big AND making sure we aren't setting goals because of a desire to keep up with others or setting yourself up to be disappointed.
Is this goal something I want to achieve in alignment with my values, or is this a goal that I've internalized from others?
Is this timeline realistic for me, or will I be burning myself out in the process to achieve this goal?
Does this goal match my mindset, motivation, skills, and abilities?
Time-bound Having a target date that you'll reach your goal by. I love using time as a way to make your goal more specific Again, see "Save $50 a week until I top off my 1-month emergency fund."
Maintain Goal Progress and Deal with Setbacks
To maintain your progress toward financial goals, you must celebrate your progress and prepare for mistakes or roadblocks. Celebrating the steps along the way of your money goal is key to helping you maintain momentum. Find a friend to cheer you on, use an old-school tracking sheet, or treat yourself to something special along the journey of reaching your financial goals. We quickly celebrate the "end" of a goal, but forget about all the effort into the middle part of a goal.
You will make mistakes along the way to achieving your financial goals. Sometimes these are external roadblocks; other times, we bite off more than we can chew. Regardless, offering compassion when those come up is key. Sometimes this means tweaking a goal, like providing yourself more time to achieve a goal, and other times it might mean putting that specific goal on the back burner.
Creating Micro-Goals
Once you have your specific, realistic, and time-bound goal, make sure you break it down into a micro-goal. Instead of focusing on "saving $10,000," consider how much you'd need to save per month or week. You can categorize your financial goals in a way that works for your brain and energy. I love taking my annual goals and breaking them down into quarterly goals to ensure I'm on track. I'm into astrology, so I'm checking my financial goals about 4x per month during the different moon phases. Other folks might love having their micro-goals fit into a seasonal pattern or monthly patterns. Having micro-goals and celebrating your progress along the way is paramount in maintaining your progress in achieving your financial goals.
Financial Goal Considerations
There you have it! Different domains of finances to think about when creating your financial goal, breaking your annual goals down into smaller goals, tips on setting your goals, and ways to celebrate your progress along the way and deal with setbacks.
Planning for 2022—The Workshop
If you are a service-based provider (writer, freelancer, therapist, coach, speaker, etc.) or are considering it for 2022, it’s crucial you head into the new year with a plan for your business. In this 1-hour workshop, we'll cover how to find a theme and main goal for your year, what shiny objects to eliminate, and how to structure your goals to be attainable and realistic so you can maintain your plan throughout the year. The workshop was originally recorded on November 15, 2021 and the purchase of the workshop comes with a 6-page workbook.
Click Here to Learn More or Purchase
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As we are entering into the final few months or weeks of the year, if you're listening to this in real time, it's a good time to revisit your financial goals. And if you don't have any financial goals, now is a good time to think about what you want your goals to be. In today's episode, I'm going to cover some ideas about financial goals you can kind of pull from, we'll cover how to set and maintain those goals, and how to stay on track when those hiccups inevitably arise, stay tuned.
All right. It is, like I mentioned at the top of this episode, a time of year where a lot of our goals tend to kind of go out the window. This is the time of year where a lot of us tend to get more breaks at work or more time off at work or for self employed, we're giving ourselves some time off. It's also the time of year where gifting is more common, whether that's bringing something over to a neighbor's home or sending something to a nephew across the country. And this is where it's so imperative to make sure that you have some sort of financial goals. So when these high spend low earning months come up, you'll be okay.
So what I'm going to talk to you about today is financial goal setting and why it's so important. So many people struggle with their money because they don't have a plan for it. And when I say that a lot of people are automatically thinking oh, she's going to talk about a budget. And I am and I'm because a budget is a type of financial goal. But I think of a budget or as you know, I like to call it a spending plan is more of maintenance. This is more habitual. This is something that you routinely do with your money so that you can move toward different financial goals. So as you get ready to set your annual goals for the year, I want you to think about what specifically you want to work toward for the upcoming year. And you can literally do a brain dump of all the things that might be related to your money that you want to work on. So let me list out some common themes or types of financial goals. And obviously, these themes are not goals in and of themselves in and of themselves. Because as you listen, you'll hear a little bit about what makes a goal a goal and not just like a wish or an affirmation or a manifestation or whatever. So let me cover some common types of, of areas in which I see people set financial goals. So financial literacy is a great area to focus on. Building your skills in the realm of financial literacy is getting more comfortable with the terms going on with your money, getting more comfortable with the ins and outs of your money expanding your knowledge and capacity beyond your current comfort zone with money. Another one is setting and maintaining a spending plan or a budget. So a lot of people are really good at setting up budgets, but they're not so good at maintaining them. So maintaining a budget is a great area to focus on. Another area that is really common is spending less than you earn. So making sure that you have a little cushion or a little bit of money left over each month. So you're not living paycheck to paycheck. Another area is debt pay down. This could be paying down consumer loans, student loans, medical debt, car loans, any sort of debt that you have, particularly debt with high interest is really great to work on paying down, focusing on your future by thinking about investing in your retirement accounts. And you'll notice I said investing in your retirement accounts and not saving in your retirement accounts. When you have a retirement account set up. It's some sort of tax advantaged plan where you either pay taxes at the beginning when you put your money in and you're not taxed when you take it out or the other way around. But what a lot of people don't think about or consider is that most of the time if they have some sort of retirement plan, there is the option. Let me take that back. There is always the option to invest in your retirement accounts or within your retirement accounts. So maybe looking at how the money in your retirement account is currently divvied up, or the fancy word for that is allocated. So seeing how much is in stocks in bonds in cash, and making sure that you're investing in alignment with your financial goals, which again, might be a two pronged goal. It might be investing more in retirement and also learning a little bit more about how to maximize those specific accounts. Saving for specific things is a very common and great Financial type of goal. And when we save for specific things, these don't just have to be Oh, I'm saving up for a new car or a new pair of shoes. I'm a huge fan of setting up financial goals that include saving up for things that contribute to your emotional and spiritual well being. So it might be saving money so that each month you can have monthly acupuncture, it might be saving money. So twice a year, you can go on a spiritual retreat and alignment with your values and your beliefs. So making sure that you're taking care of your emotional and spiritual well being. And I should also add in your physical well being there as well. So making sure that you can move your body in a way that works for your body in a way that is best suited to you and taking into account whether or not that will cost money to do.
Other types of financial goals include getting a life insurance policy, particularly if you are partnered with a partner. If you're in a relationship where one partner is working, and one isn't or where there's a huge income discrepancy between the two, you want to make sure that both people will be taken care of in the event of a tragedy. And especially if you have children under the age of 18, you definitely need to make sure you have life insurance in place so that again, in the event that something were to happen to you, or if you're raising children with a partner to you and your partner, making sure that your children would be cared for. And along with life insurance is making sure you have a will and trust, having wills and trust is not just for people who have generational wealth, having a will in a trust in place protects you and the people who you want to leave a legacy for. Meaning if you don't have a will and trust in place your assets, your money will be divided up the way that the state deems is appropriate. So that might mean your money going to a family member whom you're estranged from, or it might mean going to spending a lot of time in, in court getting caught up in probate, meaning that your family in addition to grieving the loss is also having to deal with the emotional and psychological labor of having to be in a courtroom or dealing with lawyers. So making sure that you have a will and trust in place. I highly recommend if you're traditionally employed, seeing if your employer offers any sort of legal benefits, the way that I was able to get my will and trust set up. Initially, of course, it's been what was I was gonna say advised it's been revised since the initial time that I created a wetland trust was that my employer at the time provided legal benefits for $7 a month. So I paid for legal benefits. It's kind of like health insurance benefits where I had to pay for it for a year $7 A month for a year. And I was able to get a well in trust for myself and for my partner. And then the next year, I just cancelled it because I had a will and trust already in place. So that's a great way to do it if you would like. But there are other ways that you can go about it as well. Other types of financial goals include thinking about your charitable contributions, where and how often you want your additional funds to go. And if you want it to be a big annual donation to a charitable organization of your choice, or whether you'd like to be more of a monthly contributing donator. Those are things to think about donator I don't think donator is a word but you know what I mean. And then the last kind of financial goal that I often see, is hiring a finance professional. This could be an accountant, a tax preparer, a financial planner, an investment advisor, advisor or somebody on the allied health care professions like a money coach or a financial therapist. I'm going to go back a second and add one more in between charitable contributions and hiring a finance professional. And other types of financial goals include earning more, we've talked so far about saving more, whether it's saving for a specific thing, or whether it's saving for things that contribute to your physical, spiritual and emotional well being, but also earning more money. So if you're self employed, raising your rates for your products or services, or if you're traditionally employed, making sure that you're negotiating a raise, the inflation numbers recently came out and our inflation is at 5.4%. This year in the US. Normally inflation rates are around two and a half to 3%. So what that means in layman's terms today is if you don't get at least a 5.4% Raise this year, you are taking a pay cut because the money that you currently earned is not going as far because of inflation. So make sure that your raise is not only keeping up with inflation, but Also if it's time for you to get a financial promotion or raise, making sure that it goes above and beyond that 5.4%. All right, so we talked about some types of financial goals. Now what do we need to do when it comes to financial goals. I'm a big fan of reverse engineering. If you're a therapist, you've heard me talk about this when it comes to fi setting, but jotting down the types of goals you want to achieve for the year, and then breaking them down into quarterly and, or monthly goals. I'm a huge fan of quarterly goals. To me, that gives me the type of flexibility that I need within my business and within my personal life to ensure that I'm on track. But for some people monthly goals, or even weekly goals feel really good. So first, drop down the types of financial goals you want to work on. And then be realistic about which ones you can achieve now, in which ones are ones that are long term goals. So you might be working toward multiple things at once, which is perfectly fine. If your brain operates in that way, particularly if you have some goals that are more ongoing, like setting and maintaining a budget, that would be an ongoing goal. And something like getting a will interest in place might be more of a one time goal. So you could easily do both of those things in a year or even in a quarter. So figuring out what you want to work on what you want to work toward, and then breaking them down into chunks. What do you work on want to work on in the first, second, third and fourth quarter of the year? I love doing it that way. Because again, it helps you or at least for me, I should say, it helps me to stay focused and to not get so overwhelmed by a ginormous goal, right? If I'm thinking about saving, let's say, you know, $10,000 for a down payment on a home or an apartment, if I'm an expensive cost of living area, saving $10,000 feels really, really overwhelming. If I break that into monthly goals, that looks like saving about $833 a month. Or if I want to look at that in terms of weekly goals. It's around $210 a week. So again, just reframing it in a way that feels good to you can be super, super helpful. Okay, so how do we actually make these goals that we can stick to?
I'm a fan of--Yes, using some of the SMART principles in goal setting. But for me, it's the three things from the SMART goals that are super, super important to me are specific, realistic, and time bound. And I'm a fan of reframing things into terms that work for you. So if quarterly goal setting doesn't align with you, and you're like, sounds like way to finance cool, call it a micro goal, call it a seasonal goal. If you're into astrology, call it Aquarius season goal, whatever you want to do is perfectly fine. But name it something that feels good to you that also aligns aligns with the timeline that you have set. Okay. So specific, realistic, and time bound for me are the most important things from that smart goal acronym. Specific for me, means you can check it off of a box, right? So instead of something like make more money, which I guess I could technically check off tomorrow, if a sale of one of my workshops came through, that's a little different than something super specific, like negotiate an 8% raise at work, or instead of something like this, save more money. What does that mean? How do you know that you've achieved it, it would be something like this, save $50 per week until I top off my one month emergency fund. So making it super specific is incredibly helpful in meeting your micro goals or quarterly goals. Real list stick. This is a hard one for a lot of us who are big dreamers or we have again to dip into astrology if we've got some expansive energy in our charts. If you are into the Enneagram a lot of Enneagram is ones and threes have a hard time keeping their goals realistic. And it's not to rain on their parade. That is not the point of this. I'm a big dreamer as well. But making it realistic makes it more likely that you'll stick to it. So when it comes to creating one of those big expansive goals, it's not about saying no you can never achieve that. But it's about saying how likely is it that doing the steps that I want to do this year, this month, this micro quarter, whatever you want to call it, that all be able to do that. And also come back to why I talk all the time on this podcast on Instagram over on my blog about why having a reason for yourself is paramount. Something that really gets me riled up is when people say things like, oh, I want to make six figures. Well, why. And if you don't have a reason for your why, besides some influencer was telling you to do that or because you know, somebody's landing page looked really great and it kept talking about six figures, then that's not a goal for you, my friend. You need to figure out how much money you want to bring in and why and how you will use that money to fund your obviously financial well being. But I am a firm believer that practicing financial self care supports our emotional, spiritual and emotional well being as well. So instead of something like oh, you know, make six figures or if you've been in business for a minute, the new thing is make seven figures you can't see me but I'm rolling my eyes because again, why? Maybe your goal is just as expansive as it needs to be. I'm going to say that again in a reframe. The idea here is not chase as much money as humanly possible. It is earn enough money. So you can take care of yourself to fund your financial goals and have a cushion leftover, so you don't have to be stressed out every single month. And for you that might be six figures. For you, that might be $300,000. But maybe you're like me, and you're like I have no fucking desire to chase a seven figure lifestyle. I would like to maybe double or triple my revenue if I'm being totally transparent. But when I crunched the numbers, even in my like Wildest Dreams of abundance, I have no desire to like own a private jet and ruin the ozone just so I can fly off to the Maldives for a weekend. Sorry, not sorry.
So what was I even saying? I totally took a hard turn realistic. Yes. Realistic? What is realistic for you? Ask yourself, if you're setting one of these huge expansive goals, ask yourself why is it what I need? Or is it what somebody else is telling me I should want, okay, when you have that goal in mind, then break it down into quarterly into monthly into Astro seasons into you know, annual or into, like fall, winter, spring, whatever feels good for you create something that feels realistic. And then along with that make them time bound have an end date. So if you're doing something like hiring a financial planner, it might be broken into, you know, research 10 financial planners interview three financial planners, by the end of this quarter, hire a financial planner, right, so breaking it down and making it realistic, and time bound is paramount. If you want to save for a specific goal, it could go one of two ways. You could say save X dollars by the end of the year, or you could do what I said earlier, save X dollars each month. So you have some sort of time, that helps you move toward it. Okay, so specific realistic time bound, that those are keys on achieving and maintaining your pace towards the goals, which leads me to two other things that will help you with financial goal setting and maintaining your your progress toward your financial goals. celebrate your wins along the way. I lose sight of this often I am This by no means saying like, Oh, I do this all the time. I'm really great at it. We are so quick to celebrate the finish line that we forget about what's going on between the start and the finish. So pausing once a month, once a week to celebrate your wins is huge. I do no surprise, I do Moon journaling, which means that four times a month, I'm taking a look at what's going on in my life and in my business and celebrating the things along the way that I've achieved and also being gentle, which I'll get back to in a second towards the things that I haven't yet achieved or that I've had to move. But giving yourself that time to celebrate the win is huge. A few years ago, maybe a year ago, I don't remember those coloring sheets were really popular where let's say you were saving up for a car, you'd get like a black and white print out of a car and it would be divvied up into like 20 or 30 different lines. And every time you saved a specific amount you would color in on that line toward to represent that you'd saved a specific amount of money towards your goal. Those types of things are so powerful to visually see what you are working towards. And to pause for a second and psychologically cheer yourself on for doing the damn thing is huge to celebrate your wins along the way. Whether that's in a journal, whether that's coloring, whether that's telling a friend we need support along our financial journeys, text a friend and say look I'm working on saving up for, you know, a new set of coffee mugs or to be able to save up enough in my emergency fund that I can give my boss the middle finger, right? Whatever it is, tell somebody what you're working on and help them celebrate with you along the way. I mentioned during this along the way, you know, journaling and reflecting on something else that is really important in maintaining our goals, which is acknowledging that we're human, you have to be able to practice the ability to refresh your goals and reframe them along the way. So maybe you set one of those big goals, and you're like, I'm going to save $3,000 a month. And then in four months, I'm taking myself to Tahiti, I don't know why I'm going to all these islands in today's podcast, but bear with me. And then you get a month or two and you're like, oh, shit outweighs maybe a very ambitious goal. And I'm starting to feel bad about myself. Because I didn't save up $3,000 a month, I was able to save 1500 A month or 1000 a month or 2000 a month. So instead maybe say You know what, I'll take that big trip in a year instead of in three or four months. Or you know what? Maybe I'll take an Airbnb somewhere and get my vacation in and then shift to this, this bigger goal down the road. It's not about giving up on a goal or failing a goal. It's like life happens. And we have to be cognizant and kind to ourselves when things happen along the journey. Okay, so tips on goal setting and maintaining to refresh make it specific, can you check it off of a box? Is it realistic for you? Or is it something else that somebody else told you you need to care about? Make it time bound, have some sort of schedule for what you are working on or when you will finish a goal by celebrate your wins along the way, and be kind to yourself and refresh and reframe your goals along the way.
Okay, I mentioned earlier, can you have more than one financial goal at a time, of course you can particularly if they are in different domains. And if you have a neurodivergent brain, especially like an ADHD brain, you might need more than one goal to focus on to keep you engaged and energized. You might be more of a person like me where I need like my eyes on a prize all at once. And then I do I use this language all the time. I do like a waterfall method, I need Goal A and then once I've met Goal A, I take those funds and I move it towards Goal B and then when I meet Goal B, I take the the money that I was saving for for Goal A and B and move it towards Goal C right. i That's how I operate. That's how I like to work unless they're outside of different domains. I hope that makes sense. Yeah, I think I think it does. But if it doesn't, you know how to find me. I'm always on Instagram at mind money balance. I hope this episode helped. And oh, I wanted to share that next week I'll be talking about those two common financial themes around financial goals that I hear about all the time, which is how specifically do I earn more money? And how specifically do I save more money. So we'll get into that a little bit deeper next week. If you want a little bit more around goal setting and you're like feeling the energy around goal setting.
Okay. Also, something fun for my therapist, friends, if you are like yes, I'm digging these goals. I like these quarterly goals. I like these annual goals. I want to do this for my business. I'm gonna help you out. I am going to be running a workshop for therapists on how to plan out their 2022 We'll cover how to find the main theme and goal for your year, how to eliminate those shiny objects or those goals that are not yours, but that were foisted on to you by other people and how do your how to structure your goals in a micro way so you can actually maintain your plan. It is $29 you will get access to the recording if you are not able to join live Oh plot twist. It's done on Zoom because we're still in Quarantine times. And all you have to do is head to my website MindMoneyBalanced.com/Events to register for the Zoom workshop on how to plan out your 2022 I love goal planning I have taken my friends who are in a mastermind with me through a very similar thing at the end of the year we do our annual goal planning not together like oh I'm helping somebody else set their goals but more in community so we have each other to kind of lean on and piggyback ideas off of and again just to be in the space with other people who are talking about money and their finances and their business goals is so friggin button. Oh and PS I'll have them on in a few I'm really, really excited for that, but I've taken them through it. So it's something that has been a part of my life as a business owner and as a therapist in private practice. So I love to kind of help you peek behind the curtain and see how I plan out my years to make sure that I'm staying on track. I'm moving towards the things that are important to me and I'm letting go of the things that aren't serving me. So again, that's at MindMoneyBalanced.com/Events and make sure to tune in here next week when I talk about how to save more and how to earn more.
Transcribed by https://otter.ai