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Having goals can give structure to life and help in making decisions about what actions don’t fit with the things that are important to you. Many people have no financial goals or very vague goals based on what family, friends, or society at large is telling them their goals should be.

Short term goals can be very motivating. You don’t have to wait a long time to reach them and can use those goals to spring into future goals.

Rather than being a fantasy, a goal is specific, achievable, measurable, and has a time frame. So while a realistic “goal” might be to spend less, it’s not specific. A more specific goal about reducing spending could be to reduce your monthly spending by 5% over the next six months. That goal is quantified, measurable, has a specific time frame, and is reasonable.  

Next outline steps to achieve that goal. You might say you’ll achieve this by taking your lunch to work two days a week and not making any impulse purchases at the check out counter in the grocery store. Those are specific steps that you can monitor. You can also measure how much you are reducing your spending on a weekly and monthly basis. If needed, adjust your action steps as the six months progress, depending on whether you’re on whether you’re on target, running behind, or ahead of your goal.

Once you’ve been able to accomplish a few short term goals, move on to a longer term goal. There may be several parts to your goal and you can divide the big goal into smaller action plans with their own goals. Let’s say your goal is buying a home in the net three years. You might make a small goal of contacting two or three mortgage lenders. Ask them what might keep you from getting a mortgage now, then make short term plans to address those issues. You might need to paying down debt, save a down payment, or be in a job for a little longer. Each of these can be a shorter term goal to help you get to your long term goal of home ownership. As you get closer to being ready to buy a home, make a list of the qualities you want in a home – both physical and emotional. Perhaps you want a home with a view of the mountains in an established neighborhood and it’s important for you to have diverse neighbors. Then you’ll shop for realtors who listen to you and have expertise in the type of home you want.

Sometimes reaching a goal is reward enough, but knowing that there’s a little prize at the end of it is also a good motivator. And don’t be hard on yourself if you try for a goal and miss it. Adjust the goal, make it a bit more reasonable, and take another run at it.