November is Financial Literacy Month in Canada. Check out part two of our #FLM2019 blog series below:
One of the toughest things for people when it comes to financial goals generally isn’t the process of setting them, it’s sticking to them. It can be easy for someone to create a list of goals only to have them fall off their radar. Life can get busy and a lot of the time our budgets and financial goals can be pushed aside.
To help keep your financial goals top of mind, I’ve written about three strategies that I recommend to clients when they need the motivation to stick to their goals.
SETTING YOUR GOALS
Before picking a strategy to help you stay on track with your financial goals, you need to figure out what your goals are. You might already have a few in mind, like saving up for a down payment on a house or paying off your student loan. Generally, the goals that will come to us the easiest are the big long-term financial goals we would like to achieve. While those goals are extremely important, it is also a good idea to create some smaller, timelier goals to go along with them. Try aiming to come up with six financial goals: two that you can accomplish every month; two that you can accomplish within the year; and two that you want to achieve within a year from now.
You always want to make sure that your goals are clear and unmistaken. I recommend using the SMART goal strategy. The SMART goal strategy encourages you to create goals that are Specific and detailed, Measurable, Attainable and realistic, Relevant and meaningful, and Time-bound.
To help further your understanding of the concept, I’ve drafted an example of six SMART financial goals. Remember, while some of these might sound like goals you would like to achieve, your financial goals need to be Relevant and meaningful to you, or else you may not be as motivated to achieve them.
- I will save 10% of each paycheque by auto-depositing that amount bi-monthly into a TFSA.
- I will limit the number of times I dine out (including lunches, dinners and brunches) in a month to only once a week.
- I will complete a full 12-month cycle of recorded budgeting so I have a realistic idea of my expenses.
- I will stop using my Store Name credit card and pay off its balance of $5,000, plus the interest, by the end of December 2020.
- I will budget to pay back 50% of my $10,000 student loan by June 2022.
- I will save enough money for our family of four to go to Disney World for a week in March of 2021, by putting the money I save on dining out into a trip fund.
THE STRATEGIES: HOLDING YOURSELF ACCOUNTABLE
Strategy #1 – Create a Vision Board
For inspiration and motivation to achieve your goals, consider creating a financial vision board. A vision board is a board that is pinned with images and words that relate to your financial goals. It helps give clarity on what you’re working towards achieving. For example, if your goal is to pay off a credit card account, post the image of the credit card logo with a giant “x” or PAID across the image. If your goal is to save for a down payment on a home, pin a picture of the actual home you hope to buy as a motivator.
Once you have created your vision board, it is key that you place it in an area that it will be seen. The reason vision boards work so well is they eliminate that idea of “out of sight, out of mind”. Hang your board up above your desk, stick it to your fridge or place it by your bathroom mirror. These are all high traffic areas that will help position your financial goals top of mind. If you aren’t the most creative person don’t worry, simply writing out your financial goals and keeping them in a high traffic area will also help reinforce a similar state of mind.
Strategy #2 – Start a Goal Group or Get a Buddy
The staying power of working towards your goal is even greater when you share it with others or get a goal buddy to hold you accountable. Start a “Goal Group” with your friends. Similar to a book club, meet every month with your group and share your progress on your goals. Try to choose a friend or friends that you trust completely. If you would like to keep your goals surrounding debt or your current financial situation private, that’s okay. Instead, share your goals relating to saving our staying on track of your budgeting. You can update each other on your progress, keep each other accountable, and celebrate each other’s victories when a goal is complete or significant progress is made.
Strategy #3 – Set Reminders
Thanks to technology, almost all of us are carrying around a tool that can remind us of things we need to accomplish. Go onto your phone’s calendar and program in all of the dates that you have set for your financial goals. Set multiple reminder times (i.e. six months before, two months before, six weeks before) to remind you to check in on the status of the goal throughout its timeline. Set monthly reminders for monthly goals along with a monthly reminder to check your budget to make sure your finances and savings are on track.
Most financial advisors recommend that everyone sets financial goals, even if it is only one or two, as it keeps us financially motivated. When we have a purpose for our money, we are less likely to spend it on impulse purchases and more likely to use it wisely. While it is important to stay on top of your goals, it is also key to review your goals regularly. Life happens and a sudden large expense, change in income or priority shift like a child on the way may mean your financial goals have to change with you. Your financial goals also need to be updated when you achieve one. Once one is completed, celebrate your success, choose a goal to replace it and continue the cycle.