Financial goal setting is a crucial step toward achieving financial freedom and security. Whether drowning in debt or aiming to build a substantial investment portfolio, setting and achieving financial goals can be transformative, I’m Ali, and today, I’ll share my journey from being over $100,000 in debt to building an investment portfolio close to six figures. You can put yourself years ahead in life with a year of serious focus and alignment. Here are four simple steps to set and achieve your financial goals.
Step 1: Think Big but Start Small
Many of us have grand financial aspirations, such as becoming millionaires. However, the vast gap between where you are now and where you want to be can feel overwhelming and paralyzing. This was my experience when I had $100,000 in student loan debt. Instead of focusing on the distant goal of becoming a millionaire, I set a more immediate and achievable sub-goal: reaching a zero net worth.
Why Start Small?
- Psychological Boost: Small goals provide a sense of progress and accomplishment, which motivates further action.
- Research-Backed: Studies by Stanford University researcher Szu-chi Huang show that achieving sub-goals increases the belief that the ultimate goal is attainable.
To put this into practice, focus on paying off a small portion of your debt or saving a modest amount first. For example, if you’re $10,000 in debt, aim to reduce it to $9,000. Celebrate each milestone, and use the momentum to tackle the next sub-goal.
Step 2: Activate Your Reticular Activating System (RAS)
The Reticular Activating System (RAS) is a part of your brain that filters information based on what you deem important. By setting clear and specific financial goals, you train your RAS to notice opportunities that align with these goals.
How to Use Your RAS:
● Set Specific Goals: Instead of a vague goal like “get out of debt,” specify “pay off $1,000 of my credit card debt by the end of the month.”
- Visualization: Write down your financial goals and place them where you can see them daily. This constant reminder helps your brain focus on achieving these targets.
For example, when I decided I wanted a gray-colored French Bulldog, I noticed them everywhere, and opportunities related to this goal appeared more frequently. The same principle applies to financial goals.
Step 3: Plan for Obstacles in Advance
Anticipate the challenges that might derail your financial plans and address them proactively.
Examples of Common Obstacles:
- Expensive Social Circles: If your friends have expensive tastes, communicate your financial goals to them. Suggest more affordable ways to hang out.
- Impulse Spending: Delete shopping apps from your phone or remove saved credit card information to reduce temptation.
Planning for these obstacles ensures you stay on track despite potential distractions or temptations.
Step 4: Put Your Financial Goals on Autopilot
Eliminate the need for constant willpower by automating your financial processes.
Automation Tips:
- Automatic Payments: Set up automatic payments for your debts and savings. This ensures you stay consistent without having to think about it regularly.
- Recurring Investments: Schedule monthly transfers to your investment accounts. For instance, I have a $200 automatic monthly investment in my HSA account.
Automation helps you achieve your financial goals steadily and consistently, without the daily decision-making burden.
Kickstart Your Financial Goal Setting Today
To begin your journey, take a baby step right now. Here are some ideas:
- Debt Repayment: Create a spreadsheet listing all your debts.
- Savings: Cancel one unnecessary subscription and redirect that money to your savings.
- Investing: Contact your HR department to ensure you maximize your 401(k) employer match.
Remember, starting small doesn’t mean thinking small. Set your sights on big financial goals, but break them down into manageable steps. You deserve financial freedom and abundance. Start today and watch your progress transform your financial future.
Conclusion
Financial goal setting is more than just making resolutions; it’s about taking actionable steps toward a secure and prosperous future. By thinking big but starting small, activating your RAS, planning for obstacles, and automating your goals, you can achieve significant financial milestones.
Share your small action step in the comments below and begin your journey to financial freedom today. Remember, you have what it takes to achieve your financial goals. Invest early, and often, and go after the life you want unapologetically.
