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Wednesday, October 25, 2017

9 Tips for Effective Goal Setting

Creating and accomplishing goals is one of the best feelings around. As you probably know by now, the majority of my advice is from the financial realm. Luckily for me, many of the goals people have are financially based. Making more money, saving more money, paying off debt, buying a home and being able to retire are all tasks I deal with on the daily. In order to achieve these goals, you have to be able to properly set these goals. For example, it may be a goal of yours to pay off your student loan. You cannot simply just say, “I will pay off my student loan.”

Here’s why that isn’t effective: It only leaves you with the 2 scenarios.

1) You pay off your student loan as prescribed (taking a very long time) or

2) You don’t pay it off, (which isn’t a good idea by the way).

You have to make your goals effective, attainable and measurable. Non-effective goal setting leads to you falling off and not reaching your goals. In this post, I will show you my 9 tips to effective goal setting. Hopefully, it will help you reach the next level in drilling those goals.

1) Be Specific

I mentioned the goal of paying your student loan off. The reason why that goal is not effective is that it is not specific enough. You have to say, “I want to pay off my student loan in 3 years.” You have to choose a time frame. Having the time frame allows you to be accountable over the course of that time frame. It also allows you to adjust as you go along. Saying I want to save more money this year won’t help you. Saying instead, “I want to save $5,000 this year” or “I want to save $400 every month,” will get you much further.

2) Break the goals down into smaller steps

Certain goals are too big and tough to do in one large step. Let’s go back to the original one, paying off the student loan. Say you owe 20K to lovely Mr. OSAP. If it is your goal to pay it off in three years, you have to break it down much further. 3 years is 36 months. That would be a payment of $555 monthly for three years. I would go even further and break it down per pay. 3 years is 78 bi-weekly pay periods. If you paid $256 every two weeks you would accomplish the goal of having it paid off in three years. That seems much more attainable than paying off 20K or even $550 monthly.

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3) Break it down even further

You have to break it down even further than the bi-weekly example I just gave you. Yes paying the amount every pay is good, but what you do on the weekly and daily basis is what matters. For instance, if you know you cannot live the life you want while having to aggressively pay down this debt, then you have to adjust the life you want. Normal routines such as going out for lunch, going shopping, calling in sick, must become abnormal. Your mindset has to be goal achievement on the daily. What this might require is a goal calendar that you wake up to every day so it stares you in the face. It is too easy to let 2 weeks pass by and not do what you said you would do. We have all done it.

4) Have the small steps add up to the big steps

I’m going to use the student loan example again for simplicity. So you need to save $256 every pay period to put towards the student debt. That means you have to save roughly $18 dollars a day for the next 3 years in order to pay off this debt. What can you do every day to either save that money or make extra money? $10 a day on lunch can add up real quick. $6 a day on coffees isn’t cheap either. Working one extra shift a week could add $100-$200 every week. Yes working on a Saturday isn’t fun, but if working 156 Saturdays over 3 years is what helps you pay off the debt and maintain your lifestyle you have to do it. It is the small steps that add up to the big goal.

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5) Use the SMART Method

Specific– As mentioned in point one, your goals have to be very specific

Measurable– You have to be able to see the progress as you go

Attainable– If the numbers don’t add up, it won’t happy and you will be discouraged

Relevant- Your goals have to fit your life and your lifestyle or else it won’t make sense

Time Bound- You have to have a timeline or else you won’t be able to track your goals

The SMART method is tried and true, so make sure your goals fit that model. Put a check next to each letter before you get started.

The S.M.A.R.T. Goal setting method – Mind Tools

 

6) Evaluate and reflect

The reason time-bound goals are important is that it allows you to evaluate your progress as you go. I like to set quarterly benchmarks for my goals. This works well because if you are working hard at a goal, every three months you will see some progress. Take some time every month to evaluate the big picture. Take some time every week to evaluate the little steps you are taking daily. Is the mission of spending less so you can save more working? We all have setbacks so it’s important to reflect on those and move forward.

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7) Be accountable

When I was saving to pay off my student loan and then saving up for an emergency fund, I set some lofty expectations. This meant that some weeks and months I didn’t hit my goal. I also had some months where life got in the way of my goals so saving was tough. I made sure that if I didn’t reach my goal for the week or the month, then I made it up over the next period. For instance, If you can’t reach your $400 a month saving goal one month because you had to repair the car, save a little extra over the next few months to make up the difference. This will allow you to accomplish your goal on time and give you a sense of satisfaction.

8) Adjust as you go

You have to be able to adjust on the fly when it comes to goal setting. This is why I preach the budget as a means to financial flexibility. Not having the flexibility within your goal schedule will cause frustration and failure. Be cognizant of your surroundings and agile with your goal attainment. Remember that your money is one big pot, and how you divide it is what matters. Taking from one thing and giving to another might be necessary for achieving your goal.

9) Don’t stop when you get there

There is a common act of once achieving a goal to chill out for a while, a long while. Let’s just say you knock out that student loan in 3 years like you planned. Was that the crowning achievement of your life? Chances are you have other goals too like saving for a home, investing for retirement, going on yearly vacations. All your goals will require the same dedication and commitment you had for your first goals. Don’t stop when you get where you want to be because if you keep going, you might end up somewhere you never even dreamed of.

Setting and accomplishing goals is the key to having a sense of fulfillment in life. It brings meaning to the daily grind of work, or school, or parenthood. It’s how you can make it through that crappy shift or deal with that crappy co-worker or boss. You have to remember that your goals are what matter, money is just the tool used to achieve them.

Thanks for reading my post today and tune in tomorrow when I discuss protecting your goals and protecting your future. Shoot me a message at joe@budgetboss.ca to start a plan to achieve your goals. Remember that a goal without a plan is just a dream. Have a great day friends!

“Successful people maintain a positive focus in life no matter what is going on around them. They stay focused on their past successes rather than their past failures, and on the next action steps, they need to take to get them closer to the fulfillment of their goals rather than all the other distractions that life presents to them.” – Jack Canfield
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