Financial Goal Setting - Prioritize, Track, Reward

Setting financial goals can help you work toward the future you want. There is plenty of expert advice available on how to achieve financial goals, but the first step is you – you are the most important equation when it comes to your goals.

That’s because only you know what’s important to you, and what your priorities currently are or might be moving forward. YOU’RE in charge of where your money goes.

Financial goal-setting goes hand-in-hand with a budgeting system. If you don’t currently have a budget system, feel free to check out our previous article “It All Starts with a Budget.” 

Step One in financial goal setting is prioritizing your goals. Prioritizing your goals means taking a little personal reflection time and writing a few things down. Don’t confuse prioritizing your goals with categorizing your expenses – we’re not necessarily talking about what your “should” be saving for. We’re talking about what you want your life to look like over the next few years. Would you like to save for a future purchase, like a dream vacation? Train for a new career? Raise a family? Your priorities should reflect the choices you want to make in order to create the life you want. So, grab a pencil and paper and think about what you want for about ten minutes. Write the answers down and realize they are achievable.

Once you have some set priorities, setting out how to make those a reality becomes the road map to achieving your financial goals.

The next step is tracking your expenses. This is also something we discussed in our budgeting article, but being aware of where your money is going as you spend it is a key in achieving your goals. When you track your expenses, you quickly realize that every transaction is either contributing to a goal or taking away from it. For example, buying that fancy coffee comes out of somewhere. Ideally, it will come out of your budgeting spending money, but potentially out of your vacation fund or your credit card repayment plan. The second thing you’ll notice is that by tracking your spending, you’re also tracking your efforts. Before long, you’ll have evidence of how your actions and follow-through are contributing to a happier financial life. So, try out a way to track your expenses, whether that’s a mobile app, spreadsheet or good ol’ pencil and paper.

Once you’ve prioritized or set out some goals and begun tracking your expenses to find ways to set money aside to achieve those goals, you can implement step #3 – rewards!

Rewarding yourself means celebrating your progress as you create healthier financial habits. Rewards feel good, highlight our achievements and renew our commitment. Just like receiving those ‘gold stars’ as a kid, rewarding yourself as an adult can be just as effective. Assigning rewards to a milestone of any given goals adds incentive and boosts motivation. Milestones can be time-based (e.g., using a budgeting app every day for 30 days), achievement-based (e.g., paying off all credit card debt) or increment-based (e.g., having your emergency fund reach $500, $1,000…). Rewards can take many forms; material rewards are most common but consider incorporating time and experience-based rewards into the mix as well (for example, permission to spend an entire day binge-watching TV can be a reward).

It’s powerful to realize that your budget is a collection of choices you make to create the life you want. Incorporating Prioritize, Track, and Reward into your budgeting system will boost your motivation and tackle your financial goals at the same time.

For more details on Prioritize, Track, Reward, watch the video below.