Are you struggling to get started with goal setting? Want to improve a life area by setting goals, but not sure where to start? This week we look at the difficult area of finance.
Money is so basic to existence that setting and achieving goals in this area will benefit anyone. But it’s a big scary area that a lot of people are afraid of and don’t know where to start.
This article in no way constitutes financial advice (for which I am not qualified), but it sets out some headline areas that are common goal-setting themes – ideas for you to explore further in your own life.
- Relationship with money. This one sounds very kooky to some (I mentioned it to a Chartered Accountant and he practically recoiled in horror). But I once saw an extremely compelling talk by a self-made millionaire who said he started when he was broke by locking himself into a room for three days and working through every idea and belief he had ever had about money and changing it to the view a millionaire would have. Food for thought.
- Net worth. And if you don’t know what this is, then maybe basic financial education is an area to look at. A lot of people take the time to work out what their current net worth is, versus their income. The proverbial fag packet will do, but be sure to get to a complete answer and decide what the end game is.
- Income. Many people go straight to improving and increasing their income as the way to achieve all their financial goals. Nothing wrong with this, but it usually works best in combination with goals in other areas like budgeting to give a balanced approach.
- Budgeting. This is a way of making your income go further. Some people do the basic “money makeover”. Some people develop really extreme budgets. One lady saved £150 a month by doing just 2 things: remortgaging to a better deal and getting the best gas price (she was really happy with this). One guy had five kids and a wife in home with no furniture, but he owned that home outright after 5 years. This one is definitely horses for courses, but there is a tonne of material out there – books, websites, apps and budgeting systems.
- Debt. Dealing with it, reducing it, getting out of it. This is the hole in your finances that needs plugging. This is also possibly the area with the most help available.
- Protection. This is the boring stuff – wills, insurance etc. Many people hate the process of sorting this out, but people who tackle it find enormous satisfaction and peace of mind once it is done.
- Saving. This is making sure you have some cash on hand for emergencies, big purchases or whatever. Most people have to go through a process to get any savings at all, usually combined with something else, such as budgeting or income goals.
- Investment / asset building. This is where having looked at all the other areas you go back to net worth and try to increase it.
In few areas of life are the correlations between success in one area of goal-setting so clearly interwoven as in finance. A typical barrier to success is to chase income and ignore budgeting, debt or savings, or the basic relationship with money. Commonly this is how you spend exactly what you make, because you just upgrade your lifestyle to match your income.
Sadder problems include a great budget, income and savings strategy, but no protection if it all goes wrong. Finance is a really good example of why a look across all areas OVER TIME, rather than just persistent focus on one area is useful. It is of course utterly fine to spend a period of time relentlessly focused on achieving a goal in one of these areas and thencome back to the others, but over time you must consider all of them.
Which area do you struggle most with? Or ignore completely? Let me know, leave a comment below.
Till next time!