Have you set financial goals only to feel like you didn’t have the willpower to actually make them come true? When you set financial goals in a vacuum, they are very unsexy to achieve. If I say, “Oh, I want to have $10,000 in my bank account.”, but don’t have anything good or juicy to attach the money to, I will need a lot of willpower to make the necessary sacrifices to make it happen.
When you are setting financial goals, you must understand you need an ends goal. There are ends goals and means goals. Money is always a means goal. Money is never the ends goal. There’s no point to having money without a purpose.
Tie your Financial Goals to the rest of your real life.
The first thing that you want to do when you are setting your financial goals is tie them to the rest of your real life. Imagine your life a year or three years or five years from now. Ask yourself the following questions:
- What do you want your life to look like?
- Where do you want to live?
- What do you want to be doing for work?
- Who do you want to be hanging out with?
- What are your vacations and your adventures look like?
- What does your physical space look like?
You want to get super clear about what it is you actually want from an ends goal standpoint. For example, if I’m going to travel from my office to Florida, Florida is the ends goal. How I’m going to get there is the means goal. Am I taking my car? A plane? Train? My husband’s car? This is where people get mixed up around money. Instead of setting an ends goal, they’re going gas station to gas station, and they never get anywhere.
You want to flesh out what you actually want your life to look like.
You can do this on a piece of paper or talk through it. I suggest writing it on a piece of paper. The next step is to price the things you want out. If you want a new kitchen, how much does that cost? If you want a new car, how much is it? If you want to cut back your living expenses or downsize, you want to see what that’s gonna do to your finances.
This puts big ideas that seem super crazy down on paper so you can break them into little bite size pieces. Once you know what you want, you know the ends goal and how much means it takes to get there. Then, you have two options. Some of you have enough money already. That money is going someplace else.
When I talk about “The Bleed”, it’s money that you currently bring in going towards something you don’t want. It’s going towards something you don’t care about. You need to look at the money that’s coming in. Then decide, “I want to redirect some of my current money towards these important goals.” Because you know these goals and how much they cost, you can achieve them.
For some of you, your goals may be way outside of the realm of what’s going on in your life financially. You may need a change of circumstances. If you’re making $40,000 a year, but you want $100,000 a year lifestyle, chances are you’re not going to find that money. You’re going to need to change your circumstances to be able to get those things.
Make a best guess about what you spend first.
Start by printing out a few months of your bank statements. Go through these statements. Highlight your bills, food purchases, shopping and any other area you suspect your money is going. Then, count the number of transactions in each category. You want to see which purchases are reasonable and which are not. Make a best guess about what you spend first. That way, you can look for any discrepancies and say, “Oh, I thought I spent $200 a month shopping. Come to find out, I actually spent $600 a month.”
This way you will know where to look for money. At this point, you want to evaluate whether or not these things bring you joy. Some of the money we think we bleed is money that we didn’t think of when we were writing what we want down. It’s not that we don’t want the “Hulu Membership” in our life, we forgot it.
Picture the life you want.
If you need a change of circumstance, you have to go back to the drawing board. You need to figure out what you are going to do to get the money.
- How do your natural talents align with the change you want?
- Are you going to a job working for somebody else?
- Are you working in your own business?
- Are you starting something new?
Imagine what you want. The thing that’s most important when you’re in those imaginary states is that you literally pretend. The Prefrontal Cortex, the front part of your brain, is going to smack talk you. It’s gonna be like, “Well, that’s not realistic…. That’s not what your degree is for…. Blah, blah, blah, blah, blah.” You have to picture your life as you want it to get clear about what you want. This way, you can can start to know what it is and make the moves to get the plan in motion.