Chapter 1: Money Mindset
Picture this… You’re on a road trip with no destination in mind. The windows are down, music is playing, and for a while it feels exciting and freeing. But after a few hours, you start to wonder where you’re going, how long it will take to get there, and whether you’ll have enough gas to make it. Eventually, the uncertainty becomes less fun and more stressful. That’s what managing your money without clear goals can feel like.
Financial goals are like your roadmap to the life you want. They give you a clear destination to aim for and help you figure out the best route to get there. Maybe your goal is buying a home, changing careers, starting a family, or finally taking that dream trip you’ve been talking about for years. Goals give you direction, so even when you hit a bump in the road, you still know where you’re headed.
They also act as a compass when you’re faced with tough choices. When you know what you’re working toward, it’s easier to decide whether to spend now or save for later, and to stay motivated when it means making small sacrifices along the way. Maybe that means putting extra toward debt instead of splurging on a new phone, or saying no to an extra night out so you can put more into your emergency fund. Whatever your priorities are, setting financial goals helps you figure out what matters most and make sure your day-to-day choices align with your bigger picture.
5 steps for setting financial goals like a pro:
Get specific: Your goals need to be crystal clear. Instead of saying, "I want to save money," try, "I want to save $5,000 for a down payment on a house by next year."
Make them measurable: You need a way to track your progress. Break your goal down into smaller milestones so you can celebrate your wins along the way. “If my goal is $5,000 by next year, that means I’ll need to save $416 approximately per month.” ($5,000/12=$416.66)
Be realistic: Dreaming big is great, but be honest about what's achievable. Setting unrealistic goals will only leave you frustrated and discouraged. Trying to save 80% of your paycheck is likely not going to happen (and will make you feel defeated quickly).
Set a timeline: Give yourself a deadline to work towards. Having a timeframe helps keep you accountable and focused. Whether it’s weeks, months, or years.
Review & adjust: Life happens, and priorities change. Regularly review your goals and adjust them as needed. It's all about staying flexible and adapting to whatever comes your way. Nothing is truly set in stone.
Example: Amanda’s Goals
Amanda: In 2019 she still had $28,000 of student loan debt and my Emergency Fund (we’ll talk more about this in a later section) was non-existent. She was spending money on things she didn’t need and despite having a good salary she was living paycheck-to-paycheck. Here were her financial goals:
Goal #1
I want to pay off all my student debt so I can start focusing on growing my wealth.
I will track it on a whiteboard and mount it on my bedroom wall so I see it every morning when I wake up, reminding me of my goal.
Each time I pay off another $1,000, I will treat myself to a Starbucks latte.
I aim to finish paying off my full student debt by the end of 2022.
Goal #2
I want to save $6,000 in an Emergency Fund so I can cover all my bills for 3 months in case I lose my job or can’t work.
I already have $2,000, so I need to save another $4,000 to reach my goal.
I’m going to transfer $400 from every paycheck I receive for the next 5 months until I reach my goal.
I will transfer the money on payday so I don’t forget and accidentally spend it.
I’m going to open another savings account so I can put my Emergency Fund in there, and it will be out of sight.
Now it’s your turn!
Take a moment to set at least 2 goals for yourself. Jot them down where you'll see them daily to keep that motivation train chugging along. You can revisit your goals throughout the course to fine-tune them based on your newfound knowledge.