Set Financial Goals In 4 Steps

    Published: 06-16-2009
    Views: 389,380
    Financial advisor Ric Edelman discusses how to set your own financial goals in four simple steps.

    Ric Edelman: If you are like most people, you set financial goals for yourself every January and you probably break your pledge before the month ends. Why do you fail every year? Chances are you're setting the wrong goals. So today I'll show you the four steps to setting the right goals.

    The first step; set a positive goal. Usually we set goals that tell us what not to do. For instance you might set a goal like, don't spend money. That's a negative goal. You are thinking about all the things you shouldn't be doing, which is no fun. That's why it's important to set a positive goal like I will save to buy a house. You're focusing your energy on saving, something you should be doing instead of not spending, which is something you shouldn't do. If you are really focused on saving, you won't notice that you've stopped spending.

    The second step; set a date for achieving your goal. A goal is not a goal until you set a date for it. And make sure your date is realistic. If it's not, you become discouraged and quit.

    And third; write down your goal. Until you see the goal in front of you it's not real. Take photos of your goal to the bathroom mirror, your refrigerator door, car steering wheel, even your computer monitor, keep it as a reminder and finally stay focused, keep your goal in front of you all the time.

    If your goal is to buy a home, tour model homes, watch TV shows about homes. Surround yourself with your goal and you'll find it easy to stop spending money. Rather then not spending, you'll be preparing to spend money on something really special and you'll be amazed that how these four steps can help you achieve your goal.

    Sometimes the hardest part about accomplishing a goal is figuring out where to start. Let's say you set a goal, a big one that will take a lot of time and a lot of money, like walking the entire Appalachian Trail or completing a college degree. Big goals can make you feel a little intimidated, where do you start? Well, you start the same way as if you were eating an elephant; you just take one bite at a time.

    When you have a really big goal, break it down into smaller goals. So you want to get a college degree. You can't get one today, but you can request a course catalog so give yourself one small assignment today, order that catalog. And then reward yourself for accomplishing that goal. Then give yourself another goal like selecting a course. Reward yourself when you accomplish that and then keep going. Set a goal for saving money and you'll end up figuring out how to do it by taking big goals, shrinking them to little goals.

    For example with college, another goal would be registering for the class and then selecting another class and so on. Any big goal can be broken down into lots of little goals. Every step will get you closer and closer to the ultimate destination, and making small accomplishments helps you stay motivated.

    So instead of worrying how will you ever get there, you'll feel good every time you cross a small goal off your list. Before you know it, you'll be half way there, then three quarters and then all the way there. The only way for that to happen though is to start with a single step.

    Take that small step today and another one tomorrow. Eventually, you'll have eaten the entire elephant.