What are they not?
“A dream is a wish your heart makes
When you’re fast asleep”
Maybe, Cinderella. But, then, why do I dream about taking a test I haven’t studied for in a class I forgot I was in? And what about those recurring nightmares I have about alligators where I drive along a road and it’s suddenly washed out and I have to keep driving through increasingly deep water infested with unbelievably large gators and finally make it to the other side only to have to relive the whole terrifying experience when I head back the other direction?!
And what about the dream I had last week where I walked down a sidewalk lined with shady trees and headed towards me was a vacuum cleaner that veered off the pavement and into a giant mud puddle and I was only able to record the last few seconds of it on my phone before it completely sank into the mud? What was my heart wishing for then?
Well, whatever dreams may or may not be, they’re not goals.
What are they?
You know what a goal is. It’s something you want.
What’s a good one?
A good goal brings you closer to happiness. Or joy. Call it what you want.
You’re motivated to make yourself happy.
And how do you make yourself happy? Well, to start with, it’s a good idea to find out what’s most important to you. What do you value? Safety. Financial Security. Family. Health. Travel. Community. Music. Animals. Justice. Food. TV. Sleep. Sanity.
I didn’t list money. I don’t think money is a value. Money has a value. (Obviously). But what I mean is that money is a way to obtain whatever it is that you value. Money isn’t the end goal, but it’s often the means to that goal.
Once you’ve figured out what your values are and which are most important to you, you can prioritize them.
Why have them?
Goals simply make your life easier. Once you know what you want, you just have to figure out how to get there. And once you figure that out, all you need to do is stick to the plan. After a while, look back at your goals, check how you’re coming along in your plan and adjust accordingly.
You already know this. It’s like building a house. You figure out where you’ll put it (hopefully not in a flood zone). And if you want a two story bungalow or a one floor ranch. Should you have a mother-in-law suite in case your parents need to move in when they’re 95? Are you thinking about renting out that part in the mean time? Hardwood or carpet or both or tile or concrete? You get the picture. You wouldn’t start building a house by setting the bathroom tiles. You’d start with a blueprint.
How do I figure out what I’m currently valuing?
If you want to figure out whether or not your current spending habits line up with your values and will help you reach your goals, take a look at where your money has been going for the last month. Unless you’re shelling out cash for everything, you should be able to pull up your bank or credit card transactions online. Export them into a spreadsheet and categorize them. Or, even easier, use an app to link your accounts. Mint and LearnVest will even categorize most things for you. If the app is unable to identify which category that transaction should go under, it’ll give you a lot of options to choose from.
How do I get there?
Once you see just where your money is going each month, it’s easier to see where you can make a change. If you realize you’re throwing a lot of money away eating out at restaurants, sit down and write up a meal plan for the week. Stock your fridge and pantry with only what it takes to make those meals a reality. And compare. Were you spending more eating out or eating in?
This isn’t to say you should always scrimp on dining. Maybe you’re someone who values the dining experience and tasting new foods. Look elsewhere in your transaction history and see where you can cut your expenses.
Now that you have an idea of where you can cut costs and how much you will need and want to spend on certain areas of your life, build a budget. This isn’t as tedious as it sounds. You’ve already identified what you’re going to have and want to spend your money on. Now put these monthly amounts in your app or on your spreadsheet. Mint and LearnVest both let you enter an amount for just how much you aim to spend in each category of your expenses or how much you want to stash away in savings. And as you go through the month, they’ll update, letting you know how much is left to spend in each area. Technology, right?
Your goals don’t all have identical time frames. Some of your goals are very short-term. Some are recurring. Some don’t have a definite date. As examples, I’ll share a few of my values and the goals I set to fulfill them.
VALUE: I like to travel. I particularly like mountains. I want to take at least one big trip a year.
GOAL: I need to save $2,000. Once I have this saved, I know I can take the trip. This is a yearly goal.
PLAN: Set up an automatic transfer of $100 from my checking account to my savings account each time I get paid. I get paid twice a month, so after 10 months, I should have enough saved to take a
trip each year.
VALUE: I want to be financially secure. I don’t like having large amounts of debt.
GOAL: I need to pay off my student loans. Some of these loans have a high interest rate, so I target these first. I want to pay these off in five years or less.
PLAN: Automate my minimum student loan payment from my checking account to the agency each month. This drops the interest rate on each of my loans by 0.25%. Figure out how much more I need to pay each month to have these paid off in my desired time frame. Make these extra payments. Enter these payments in a spreadsheet (I call it “Debt Plan”) and track my progress.
VALUE: I want the safety and security of owning a home.
GOAL: As I get further along in the above Debt Plan, I will adjust my budget to save for a deposit. In the meantime, I will learn about the expenses of home ownership, areas I am interested in living in, how to get myself in the best financial position to qualify for a great interest rate.
PLAN: Learn about both the costs of home ownership and building a home – one-time expenses, recurring expenses, insurance expenses, repair expenses. Look at neighborhoods online. Look at tax rates.