Your morning alarm clock is not so subtly waking you from your slumber. As you force your eyes to peel open, you realize that the sun isn’t even awake yet. Your bed and blankets are begging you to stay.
But then you remember – today you leave for your much-anticipated vacation! All of a sudden it’s easy to open your eyes and jump out of bed.
With a skip in your step, you get ready for your day. Once you’re ready to go, you hop in the car and hit reverse.
But…do you know where you’re going?
Of course you do! How could you prepare otherwise?
Without a destination, you can’t make a plan. You don’t know what to pack or which direction to go or who to take with you.
And this is why you need goals. They show you how to prepare for your future plans. It’s one thing to plan a road trip, another to plan a relaxing beach vacation, and another thing entirely to plan a hiking excursion in Alaska. They’re all great in their own way, but each one requires vastly different preparations.
The same principles apply to setting financial goals. You may want to start saving for your next big trip, grow your retirement savings, start your own business, or build a habit of budgeting. Each of those are healthy goals, but take different strategies to achieve.
Whichever financial aspirations you decide are most important to you, the journey to reaching your ideal financial life, starts with setting goals. Once you know what you want to accomplish, you can make the best plan to get there.
Here are 5 benefits of setting financial goals.
Benefit 1 - You make the right plan
Once you know what your goals are, you can figure out which direction you need to go. You don’t head for the desert if your destination is the ski slopes. In the same way, you wouldn’t focus on saving for a new vehicle if your priority is to build your emergency savings. When you know what you want to accomplish, you can make the best plan to achieve it.
Benefit 2 - You understand your priorities
Life is full of distractions. Between family, work, friends, hobbies, and everything else, it’s hard to take the time to consider what really matters to you. When it comes to financial goals, there’s an endless list of excellent things you can aim for, but you simply can’t do it all. Once you take a moment to thoughtfully consider which goals are your highest priorities, it reveals what’s most important to you.
Benefit 3 - You stay motivated
A trip is a lot more fun when you’re excited about the destination. Working toward a financial goal that’s truly important to you, naturally gives you more motivation to see it through. Whether it’s a short-term goal, like paying off all of your debt, or a long-term goal, like saving for retirement, you’re less likely to give in to the temptation to splurge on unnecessary costs along the way. And as you get closer to reaching your goal, your motivation continues to grow.
Benefit 4 - You feel accountable
While motivation is one way to stick to your plan, accountability is another. When you set specific and measurable goals for yourself, you feel accountable. And when you tell others about your goal, you feel even more accountable. Instead of giving yourself an ambiguous goal like, “I’m going to save more money this year”, set a specific goal like, “I’m going to save $10,000 in two years for a down payment on a new home by setting aside $417 dollars every month.” When you set a specific goal like that, you feel accountable, and not to mention, more accomplished, as you work toward the finish line.
Benefit 5 - You gain a sense of achievement
Reaching your financial goals takes effort and discipline. When you put the right actions into making goals a reality, it’s worth celebrating – both the big and small wins. Some goals are accomplished quickly and others require more time. As you reach those key milestones you set along the way, reward yourself. It’s hard work to reach your financial goals, so have some fun too by celebrating your achievements.
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