Before setting goals, my financial journey was a hot mess. I knew that I wanted to be debt free, but that was about it.
After numerous failed attempts to improve my finances, I finally realized that you have to know exactly what you want (a goal) in order to figure out how to get there (a plan). Otherwise, you’re basically tossing your desires into the air in hopes of luck catching it.
Since taking my debt-free journey seriously, I’ve paid off over $19,000 in debt on one income and it definitely wasn’t due to luck. Instead, I envisioned myself living my best life (aka not being broke), set goals to get myself there and went to work.
Nothing you really want in life will come to you easily, but that’s the joy of the whole process. It doesn’t matter if you reached the finish line running, jumping, or crawling, what matters is that you got there.
Here are 4 ways financial goals help you pay off debt so you can live your best financial life!
You know exactly what you want
You were probably asked over a dozen times what you wanted to be when you grew up. A child’s mind dreams big, so an occupation like a famous singer or a brain surgeon probably sounded perfect for you. Then, as you got older those dreams started to really sound like just dreams versus anything you could (or would) actually attempt to attain.
Without goals, you’re simply toying around with endless possibilities that appear meant-to-be. It’s not until we actually begin working towards something that we realize our heart is just not in it. This also relates to our finances.
When you sit down and think about what you want to accomplish financially, you’re coming face to face with your true desires. You’re discovering what you really want out of life, and have a clear vision of what is in store for you. Those extravagant daydreams lose their allure when they’re transferred from your mind to your piece of paper.
Not sure where to begin? Start by making a list of three things you want to achieve. This could be anything from paying off a low credit card balance to starting an emergency fund, but just make sure it is short-term.
If you hit a roadblock, view it as a positive. This means that you’re thinking in-depth and not just simply writing down the first thing that comes to mind. Leave your list for a day or two, if needed, so that you can start back fresh. Cross out any goals that no longer appeal to you.
Related reading: How to Manifest the Life You’ve Been Dreaming Of
You become the little engine that could
Let’s face it, the journey to financial freedom is hard and when something is hard it’s easier to give up on. So many people accept a life in debt because getting out of it appears to be too large of a task. I don’t know about you, but I often feel a sense hopelessness when I believe that something is out of my reach. It’s like, what is the point in trying when you’ll just fail anyway?
Answer: There’s no failure when you’re putting forth effort in achieving something, only valuable lessons learned and lower debt balances. You know how the phrase goes, you never know until you try.
Setting financial goals is like sprinkling gasoline on top of a wimpy flame. It ignites a massive fire of motivation to help you reach your full potential. Suddenly, those dreams you’ve been putting off become your main focus.
Simply telling yourself that you’re going to do something leaves room for failure. I know, because I failed too many times to keep count. I would say that I was going to stop eating out or finally begin saving money, but when the time came to do it I lacked willpower.
Thus, writing down your goals and action plans is sort of like a signature on a certified agreement. It’s set in stone, and you must follow the terms or suffer the consequences. You’re basically forced to put one foot in front of the other to fulfill your obligations to yourself.
When you know where you want to be financially, you make daily decisions that will ultimately help you reach your goals. This can include bringing your lunch to work or skipping an outing with friends.
Each day has a purpose and provides you with an opportunity to become one step closer to living the life you deserve.
With goals, your money has a specific job and the boss is the budget you’ve created. You’re the CEO over your business (your life) so you get to call the shots. Whether you succeed or fail is completely up to you.
You’ve proven you’ve got what it takes
With every goal we reach, there’s a sense of accomplishment that nurtures self-confidence. We’ve proven that we can achieve what we set our minds to, and starting small gives us the guts to set more in-depth, long-term goals.
Succeeding is the ultimate outcome, but gaining confidence does not always mean that a goal was reached. Even if you didn’t accomplish what you set out to do, you may be surprised to still dang good about what you’ve done. You took the first step in reaching your goal, and with debt, the first step is always the hardest.
By just simply writing down what you want to achieve you’ll feel more hopeful about your finances. You’re recognizing the need for change and strategizing how to get to where you want to be.
Additional tips for setting financial goals
Being specific allows you to develop a more effective action plan. The more details you can add, the better. Think: who, what, when, where, how.
Simply saying that you want to pay off debt just isn’t going to cut it. Having too broad of a goal will make it difficult to focus your efforts on achieving it, and soon you’ll become overwhelmed.
Instead, try this: I will pay off $2000 worth of credit card debt by September.
We would all like to be millionaires, but for a lot of us, that isn’t going to happen. Instead of waiting for that lucky lotto ticket, set a goal based on your current financial situation. There’s no sense in working your butt off for something that isn’t reachable, and aiming too high will leave you feeling discouraged.
Goal setting is like riding a bike. You start off taking short routes with your training wheels, then when you get experience you’re rolling down freeways. Not really, but you get the point.
By breaking up your goals into smaller chunks, you quickly build up the confidence needed to continue working towards the bigger picture. Millennials are known for needing instant gratification, and to be quite honest, who really wants to wait years to finally accomplish something?! Not me.
Set a deadline
I’m sure that most of us had something that we wanted to achieve within a certain amount of time, but it took way longer than expected. Or worse, we never got to it at all.
Instead of waiting until the last minute to get something done, set a realistic deadline for yourself. Remember that “soon” or “within the next few months” is a recipe for procrastination. Use an actual date and stick to it.
When you know exactly what date you’re aiming for, you can properly pace yourself to avoid feeling overwhelmed.
I like to think that paying off debt requires 30% money and 70% mindset. If a process is hard and requires sacrifices to be made then our natural instinct is to throw in the towel. Setting financial goals helps you retrain your mind to think supportive thoughts that will ultimately influence your actions to get you the results you want. What are your financial goals?!