How to Write Down Your Financial Goals
By: Shay Olivarria
It’s come to my attention that some folks are unclear about how to write down their financial goals. When I ask people to do it (so that we can create a spending plan, for example) they give me vague and general goals that are unhelpful. To that end, here is a brief how-to guide on writing down your financial goals.
Imagine your meta-goal & write it down
The first thing that has to be done is to come up with a goal that you’d like to achieve…. and write it down.
Example “I want to own a home.”
Clarify meta-goals with the S.M.A.R.T. technique
Whatever you wrote down is probably not as detailed and clear as is most useful. To help you clarify what you want, use the acronym S.M.A.R.T. (specific, measurable, attainable, realistic, and time-bound). With the example below, it’s clear what my idea of a “home” is. It also helps to better understand how much money I might need. Buying a studio condo, on average, will cost less than a house in the same market. A two bedroom house, on average, will cost less than a three bedroom house in the same market. Be specific about what you want and put a time limit on it. That will give you some accountability.
Example “I want to own a three bedroom, two bathroom house in a cul-de-sac in my city by 2020.”
Write down several sub-goals for each meta-goal
Once you have your meta-goal you’ll need to think about what steps you’ll need to take to reach those goals. Again, be as specific as possible. Saying that you’ll need a down payment is obvious, but it may not help you pass by the Starbucks in favor of a home-brewed cup of tea. Understanding that you’ll need to have a specific amount of money by a specific amount of time may.
Example “Save $20,000 for a down payment by 2020.”
Write down steps to reach your sub-goals
Okay, so we know that you’ll need twenty grand. That’s a HUGE number. Breaking it down to the small things we can do that will make a large difference may help. Try to look at the ways that you currently spend money and find out where the small opportunities to make a big difference are.
Example “I will pare my spending down by $100 a month by eating out less and purchasing bottled drinks in bulk instead of buying from the café at work.”
Example “I will contribute $150 monthly to my CD laddering strategy to grow my down payment.”
By the end of the exercise your paper should look similar to this:
Meta-goal – To own a a three bedroom, two bathroom house in a cul-de-sac in my city by 2020.
Sub-goal – save $20,000 for a down payment.
Steps to achieve this goal:
I will pare my spending down by $100 a month by eating out less and purchasing bottled drinks in bulk instead of buying from the café at work.
I will contribute $150 monthly to my CD laddering strategy to grow my down payment.
Timeframe:
December 2020
It may seem silly to be this thorough, but you’d be surprised how easy things seem when you take the time to write them down. Life is complicated and messy. Writing things down can often help make things simple.
Shay Olivarria is the most dynamic financial education speaker working today. She speaks at high schools, colleges, and companies across the country. She has written three books on personal finance, including Amazon Best Seller “Money Matters: The Get It Done in 1 Minute Workbook”. Shay has been quoted on Bankrate.com, FoxBusiness.com, and The Credit Union Times, among others. To schedule Shay to speak at your event visit www.BiggerThanYourBlock.com.
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