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Setting Money Goals: 3 Essential Steps

In the last post, we talked about the differences between resolutions and goals. What is most important is that we are clear on what the goal is and why you want to embark on this journey towards that goal.

Journaling is a great way to explore desires while gaining clarity on what we value most and how we want to spend our time. I would like to add that it is important to understand if your goal is for intrinsic or extrinsic reasons. In other words, do you want to save money for a trip to please your please others or would you rather use that money to plan a solo road trip because that would make you happier?

The motivation for your goal has to come from within and not from external factors such as the need to please others, to fit in, to avoid conflict, etc. Studies have shown that intrinsic motivation – engaging in a behavior (such as pursuing a goal) entirely because it comes from within – is far more effective at maintaining motivation and creating progress. So if you are setting a goal in order to obtain an extrinsic reward such as fitting in, pleasing others, or to avoid an extrinsic punishment such as disapproval from family, then it will be much more difficult to sustain in the long run.

Intrinsic motivation comes from the desire for growth, curiosity, development, satisfaction and joy.

But wait… What if my goal is to make more money or buy myself the latest iPhone - then isn’t that extrinsic motivation? Is that wrong?

No. There’s nothing wrong with desiring more money or a new phone. The question is WHY? Be honest with yourself. Why do you want these things? So long as you are clear on the why then let’s move on to the 3 Steps that can get you there.


1)      Focus on How You Want to Feel.

This is crucial. This also verifies if the motivation is coming from a centered, positive place that is meaningful to you. Take a moment to meditate on this. You can also write about how you want to feel or if you are a visual person, you can draw, or create a collage.

For example, maybe my goal is to make more money in the next 6 months:

Ask yourself: Why do I want this? ---- Perhaps I want to make more money to pay down my debt and be completely debt free.

If I did this then how would it make me feel? ----Maybe it would make me feel free, empowered, nurtured, safe, and confident.

Take those feelings and meditate on them. Visualize yourself moving with confidence, feeling free as you walk down the street or sit down to pay your bills. I recommend taking a few minutes each day and reminding yourself of how you want to feel as you are pursuing your goal of making more money (maybe during your daily meditation). Let these feelings sink in and settle into your bones. These positive feelings will help drive your decisions and behaviors down the road.


2)      Make Your Goals S.M.A.R.T.

You may have heard of how to set S.M.A.R.T goals. It’s a common approach to setting goals and it helps us further clarify the goal and implement a strategy. Without a plan on how to accomplish your desires then how can you know what to do next?

Let’s continue with our example:

Specific – Narrow down your goal and make it specific and simple. “Make more money so that I can pay off my debt”

Measurable – Quantify your goal. How much? How will you know when it’s been achieved? How will you track your progress?

So now we attach a number to it and track it using a spreadsheet. You can also track it by writing it in a notebook, creating a separate account, etc. “Make an extra $2,000 so that I can pay off my debt”.

Achievable – How will the goal be achieved?

What resources/skills/tools are available to you? “I will make an extra $2,000 by (freelancing, selling on Etsy, holding a yard sale, lowering expenses, etc.) so that I can pay off my debt.

Realistic – Given your current circumstances and available resources, is this a realistic goal? Is this the right time? Is it worthwhile to you?

If you plan on scaling back on some expenses to apply that extra money towards your debt, is that realistic? Are you willing to cut back on your eating out or monthly massages? Do you have the time and energy available to freelance or hold a yard sale?

Time – What is the target date for achieving this goal? This will determine where to focus your time and energy on a daily basis.

Is this timeline realistic? If not, what can you do to make it more realistic/achievable? If the goal is to make an extra $2,000 in the next 6 months then break it down by month or week to make it less overwhelming.

After using SMART, the goal may look something like this:

Regular Goal: Make more Money

SMART Goal: Earn an extra $2,000 or $334 per month in the next 6 months by freelancing, cutting back on expenses, and holding a yard sale so that I can contribute the extra income to my debt. I will track my progress by using a spreadsheet.


3)      Use Systems!

This is where we focus on the process and in many ways, it’s the most important part of achieving your goal. Systems, when kept in place and used with consistency, really do work!

We are now clear on our goal. It’s specific and we’ve asked all the important questions. We know how we want to feel as we are working towards the goal. We take these two things and set up a system to achieve this goal. This can be created in a variety of ways. Think of how you can carry out your strategy or plan on a daily/weekly basis. Can you schedule anything ahead of time? Can you automate or set a specific day or time to work on this goal?

Using our previous example, if the goal is to earn an extra $334 a month to contribute towards existing debt then how can we create a system for it?

Perhaps one weekend per month is devoted towards a yard sale. Schedule it. Put it on your calendar. Spread the word.

If you are cutting expenses, how can you automate this or implement a system? Maybe you lower your internet bill or switch phone companies so that each month you are saving X amount of dollars and that difference goes to your debt.

Maybe you pick up a side gig or freelance work. You devote a couple of hours each evening to new projects. Share your plan with a buddy. Have regular check-ins with your buddy.

Whatever system you set up, schedule it and focus on maintaining consistency. Automate as much as possible and show up. Remind yourself daily of how you want to feel (confident, free, etc.) as you work on your goal. Consistency is key to creating progress.

Next time we’ll talk about how to stay motivated during this process.