Updated: Aug 16
There are 1,000s of inspirational quotes about goal setting.
There's even more inspiration posters with these quotes crookedly hanging in high school hallways.
But do those quotes have value? And is goal setting worth it?
One of my favorites is:
"“If you want to be happy, set a goal that commands your thoughts, liberates your energy, and inspires your hopes." - Andrew Carnegie
Setting goals is fine. But setting goals that inspire you to action, keep you motivated, and add happiness to your life is what truly makes the difference.
When it comes to money, you need to balance long-term goals with shorter goals that provide quicker successes. It may be helpful to think of it in three buckets.
Short Term Goals
These goals should happen within the next year and include actions that you can start today. Examples could be:
Start a budget so you spend less than you make
Save up for a long weekend away with your significant other
Read two books that interest you (investing, cryptocurrencies, etc)
Mid Term Goals
The timeframe for these goals should be within 5 years. Accomplishing these goals will take consistent action over a longer period of time, but you can start building momentum today. Things like:
Saving for a European Vacation
Down payment on a new house
Saving to pay cash for a new car
Because these bigger goals take longer and more consistent action, it's a good idea to automate as much as you can. Create a monthly transfer from your checking account to a savings account, or have your employer split your direct deposit into two accounts (one for typical spending and one for your goal).
Long Term Goals
These are goals that will take more than 10 years to accomplish. For many people, this may be saving for retirement. But for those of us more than 10 years away from retirement, that may not sound super inspiring. It may be better to think of it as saving for "financial freedom," when work becomes optional. Saving enough to create financial freedom takes decades of consistent work and smart investing. Here are a few steps you can take today to get started
Automate, automate, automate: Many times this can be done easily through your employer's 401(k) plan, but monthly contributions to a Traditional or Roth IRA work too
Run some projections to make sure you are on track. Or work with a Certified Financial Planner professional to craft a plan together.
Ignore short-term market volatility. In order to accomplish long-term goals, some degree of investing will likely be necessary. Don't let the day-to-day fluctuations of the market scare you away from what is necessary to accomplish your long-term goals