Your goals just might be the one thing that motivates you outta your current financial situation. So in my Organizing Your Finances series I’m startingÂ with setting goals. Here are some goal setting techniques to assist you.
Setting smart goals can increase your likelihood of success. There are countless articles from around the web on smart goals, but the University of Virginia has a great worksheet on the subject. Smart goals are:
- Results Focused
- Time Bound
Setting smart goals with your money is…. well… smart. Examples might include:
- Specific – I want to retire at age 62 on $70,000 after-tax income. Furthermore, because I’m worth it, I want to have an additional $15,000 a year for 15 years, worth of travel money for vacations because I love to travel and want to see the world.
- Measurable – In order to accomplish said goals, I need to save 15% of my income and earn an average 4.5% return on my investments. This is all stuff you can calculate in planning software on your 401k page. It’s also just a starting point.
- Achievable – 4.5% return and savings 15% is doable. If it’s not, you may need to adjust your expectations.
- Results Focused – At the end of the year, if you saved less than 15%, or earned less than 4.5% return, you might need to make adjustments.
- Time Bound – Age 62 sets the time. Saving money from each paycheck in your 401k also gives you a timeline. Checking that you saved 15% at the end of the year is time bound.
So you have smart goals, now what? Visualization? Positive Thinking? That might work. A better way to execute is WOOP. What’s WOOP you say? WOOP is a strategy developed by Gabriele Oettingen for changing habits and fulfillingÂ wishes. It stands for:
The process is envisioning the future – wishing. Imagine the best outcome and obstacles to overcome. Then develop a plan to overcome the obstacles. Visualize yourself overcoming these obstacles and how you are going to do it. Visit woopmylife.org for more information.
How does this apply to your money? Well, I’m glad you asked. Instead of just imagining your world travels and carefree lifestyle in retirement, ask yourself,Â what might stop this awesome life from happening?Â Obviously, if you never start saving in your 401k, you will never get there. So wish for an awesome retirement. Imagine the best outcome of having a FAT 401k when you turn 62. See the obstacle of never contacting your HR department and increasing your contributions. And Plan on calling first thing Monday morning. Envision yourself calling and increasing contributions. Do it! You’ll thank me.
Goals are important.Â They give us focus and direction in life.Â Making SMART goals and using WOOP can lead to more success around your goals. Using these techniques withÂ your money goals might be you are looking for to changes your life and your money.