“Winning is not a sometime thing. It’s an all time thing. You don’t win once in a while, you don’t do things right once in a while, you do them right all the time. Winning is a habit. Unfortunately, so is losing,” stated Vince Lombardi, former championship coach of the Green Bay Packers professional football team.
Winning financially and achieving financial goals is not a sometime thing, it’s an all time thing. The seven steps to setting and achieving financial goals are not secret. We do it all the time on our jobs, when we set sales or production goals, cost reductions or specific project achievements. The trick is to apply the same techniques to your finances, with the same rigor and personal management. It starts with a winning attitude.
Seven steps to setting financial goals
Step 1. Sit down with a clean sheet of paper and brainstorm the question, “What do I really want out of life?” Write down every possible financial goal that comes to mind—a house, early retirement, debt payoff, children’s education, new car, overseas vacation, etc. Dream and write them all down.
Step 2. Discuss the list with your family or people who are significant in your life. With their input, expand and modify the list. In working with clients, I find that many times they have not discussed their family’s financial goals and agreed on the priority. This lack of communication about finances can lead to serious family conflicts.
Step 3. Now go over your list a second time. This time, refine and prioritize the list, adding an element of realism to it. Write down the items that are most important on a sheet of paper called “Key Financial Goals.” Cross off the items you really don’t want or need. Move anything you might have mixed emotions to a separate sheet called “Future Goals.” After you have achieved some of your key goals, you may want to include some items from this list.
Step 4. Expand each of your key goals, estimating the cost (in today’s dollars) and when you will achieve the goal. It is very important that you are specific in each of these areas. For example: Develop a college fund for my son that will pay 50 percent of his college expenses at a public university—$30,000 needed by 2019.
Step 5. Separate your key goals into short-term, intermediate and long-term objectives. Short-term goals can be achieved in less than one year and might include the establishment of an emergency fund, this year’s vacation or minor home improvements. Intermediate goals of one to five years might include paying off credit card debt, saving for a house down payment or making major home improvements. Long-term goals of more than five years might include college funding, retirement or a vacation home purchase.
Step 6. Develop a plan for achieving each key goal, breaking down large goals into their main elements. Using the college fund example: Research public college costs; open a 529 Saving Plan account; invest $328 per month using automatic withdrawal from my checking account, research investments that could provide a higher return. (Assumes college cost inflation of 6 percent and a rate of return on the invested funds of 6 percent. Total sum needed in 2019 is $53,725)
Step 7. Monitor your progress by reviewing your financial goals at least annually and revising your plan as necessary.
Winning financially is a continuous process that starts by setting family goals and then working and winning everyday to achieve them. If your financial position is not where you want it to be, you have to take control and make it happen!