If you’re thinking about setting some goals now that 2020 is here, you’re not the only one. The new year presents an opportunity to better ourselves, and creating financial goals is a great way to plan for the future you want.
Around 60% of people make new year’s resolutions, but with only 8% actually sticking to them, how can you set goals that last longer than your first week back at work? Whether you want to get your foot on the property ladder or save for retirement, our guide to making (and maintaining) those financial dreams will keep you on track.
Choosing your goals
Setting goals forces you to reflect on your life and think about what you really want. What will make you happy? Where do you want to be in 5, 10, 20 years from now? While money itself probably won’t make you happy, it’ll give you a means of obtaining the things that will satisfy you. Not to mention the feelings of control and safety that a strong grasp on your money gives you.
With specific plans in place, you’ll be more likely to succeed (this study found that the 14% of people who actually had goals were 10 times more successful than people without goals). If you’re not working towards anything, you’re likely to spend aimlessly (aka, more than you should) and end up with few savings. Setting goals is a simple way to guide your focus and track your progress.
If you’re not sure what your money goals should be for 2020, take our quick quiz. We’ll help you narrow down your dreams with just a few simple questions.
What are some popular money goals?
In need of some inspiration? Here are some common money goals:
- Taking control of your spending
- Buying a home or car
- Getting out of debt
- Building an emergency fund
- Saving for life events (e.g. a wedding, a holiday)
- Saving for the future (e.g. retirement, your children)
Remember that goals - money-related or not - are personal. So while your friends might be saving for a house deposit, if you have no interest in buying a home, that’s absolutely fine. Committing yourself to a goal that doesn’t inspire you is not only pointless, but you’ll find yourself losing motivation and giving up before you’ve even started.
Get creative with a visioning exercise
Visioning exercises are an inventive way to imagine your best future self and everything that comes with it, from your career to family and money. Visioning involves looking ahead and picturing yourself in 10 or 20 years time. Where do you see yourself? Try not to constrict yourself by the realm of what you think is possible; for this exercise, imagine that everything is up for grabs.
Once you’ve pictured your ideal scenario, you can work back from here and consider the steps you’ll need to take to reach this goal. For example, if you see yourself practising as a Michelin star chef in the Scottish highlands, you can assess this dream against your current situation. How close is this dream? Will you need to enrol onto a cookery course? How much will this cost? Consider as many financial details as possible to create the most comprehensive plan.
Bear in mind that this exercise requires peace and quiet - you’ll want to be free to reflect on your situation without interruption. Carve out some time and follow these 7 steps for visioning, or you might like Mel Robbins’ visualisation tool.
While you’re free to let your mind run wild during visioning, setting realistic goals is key. Working towards a goal that you’re likely never to reach is going to be de-motivating, particularly if you realise this after months of hard work.
We suggest breaking down big goals into smaller, more manageable chunks. For instance, if you want to buy a home, consider all of the individual costs involved. Start by tackling them one by one - how much will you need for your deposit? How much will you need for stamp duty, and legal fees?
Remember that as your life changes (such as when you get a new job or start a family), so will your goals. It’s important to reassess your goals every year or when you reach a major milestone to make sure you’re on the right trajectory.
How to achieve your money goals
Now that you’ve (hopefully) thought of some goals you’d like to set yourself, it’s time to make a plan to get stuck into them. This is the juicy stuff; the main course, if this article were a meal. It’s all well and good having a list of goals in mind, but if you don’t have a plan to achieve them, it’s all in vain.
The first step is to write your goals down. This might sound trivial, but research shows that people who have a visible list of their dreams are more likely to reach them. Not only will this serve as a constant reminder of what you want to achieve, but it should help bring your dreams to life. If your goal is to retire in a beautiful village on the coast, why not choose a photo of your ideal location and make it your phone screensaver?
Next, you’ll want to make a budget - we’ve written an easy to follow guide to making a budget. This is all about knowing how much money is coming in, how much you’re spending, and how much you’re saving. Be careful not to underestimate how much you spend on essentials, like food and utilities (this is a common pitfall when making a budget). Factor in any income you want to put towards your goals - for example, if you want to pay for a training course or save £50 a month towards a home deposit.
Set some time aside each week to check in with your goals. It doesn’t need to be a long time, but try and make it the same time each week so you get into the habit of checking in with yourself. Hopefully you’ll enjoy tracking your progress towards your dreams, but if you find the admin part a bit dull, plan something fun to reward yourself for your hard work and dedication.
If saving doesn’t come naturally to you, automating the process will make it much easier. On pay day, you could set up a direct debit to automatically move money from your current account into a savings account, leaving you with one less thing to worry about. Or there are plenty of apps to do the heavy lifting for you. Chip, for example, uses a clever algorithm to calculate how much you can afford to save each week without leaving a noticeable dent in your bank balance. It’ll move the money into a separate account which you can withdraw at any time (we suggest you don’t, though!)
Some tips for sticking to your goals…
- If you’ve got several, stick to one at a time. If you attempt to broach all of your goals at once, there’s a chance you’ll get overwhelmed and give up. When it comes to planning for the future, slow and steady wins the race.
- Tell someone about your goals. Confiding in someone you trust means there’ll be someone else to hold you accountable or motivate you if you find yourself falling back into old habits.
- Regularly track your progress. Checking in with your goals is a good opportunity to assess what’s working and what’s not, and identify areas for development. Don’t forget to reward yourself every now and then - reaching financial goals isn’t easy!
- Don’t be too hard on yourself. Everyone slips up now and then, you’re only human. So if you don’t make the progress you’d planned to one month, don’t berate yourself, but get back on track next month.
- If you’re planning for the long-term… read up on how to stick to these kind of goals here. It can be easier to get sidetracked when the finish line feels so far away, so find out how to prevent this.