This week, I read the journal publication of a study regarding a particular financial counseling strategy. The researcher was looking at a Transtheoretical Model from counseling psychology and seeking to adapt it and apply it to financial counseling. I thought it was a very interesting read. Yes, I am that nerdy. 🙂 Psychology is very interesting to me and I’m always looking for ways to try and improve myself and my ability as a counselor.
Reading that study got me thinking a lot about a particular idea: Motivation. Motivation is one of the biggest precursors to both change and success. So, if we don’t feel motivated to change, are we lost? Is there no hope for us to turn things around? I think the answer is yes and no.
If we cannot find reason or motivation to change, then we will likely not experience change. It’s the simple truth. I think you’d be hard-pressed to find evidence of change anywhere in life that exists without some form of catalyst, whether that catalyst is an epiphany, a reaction to reading a blog post, or some type of crisis occurring. The point is that we need a reason to change. If we don’t already feel motivated to change, then we need to figure out how to create some motivation. If we don’t, then we simply won’t experience change or growth or progress. But there is some hope to be found because we have at least one, tangible method to foster motivation for ourselves.
I think a powerful potential motivator for change can be the existence or creation of goals. Do you have any goals for your financial life? By setting goals, you can create your own source for motivation.
Goal setting can make big differences in life. Consider this illustration: In a study of Harvard’s MBA program graduates, students were surveyed on their goals after graduating. 84% had no specific goals, 13% had goals but they weren’t written down, and 3% had clear, written goals. Ten years later, those grads were interviewed again. The 13% who had goals were earning, on average, twice as much as the 84% without goals and the 3% with written goals were earning, on average, ten times as much as the other 97% of graduates.
So where does one begin if one wants to start setting (and meeting) some financial goals? Well, that’s hard to answer. It all has to do with where you are and where you want to be. But no matter what your goals are, there are some guidelines to your goal-making that can help you in the process.
Generally, when you are setting goals, these are the things that you should keep in mind: 1) Try to come up with at least one goal for each of these time frames: today to 3 months, 3 months to 1 year, and 1 year to 5 years and beyond; 2) Your goals should be specific. Instead of saying, “I want to reduce my debt,” a stronger goal is to say, “I want to pay off my VISA card and my MasterCard.” The more specific, the better, in most cases; 3) Your goals should be realistic. “I want to pay off my house by the end of 2015.” Well, if I owe $65,000 on my home, that’s certainly not realistic. Goals are meant to be attainable; 4) Financial goals, in general, can be easy to have measurability built into them. Having measurable goals is good. If you have a goal to “save more,” you can have better success be making the goal more specific, such as “I want to save $1000 in an emergency savings,” and you can measure how you progress in that goal each month or paycheck or whatever; 5) Goals with a time frame for their completion can help to instill urgency in meeting the goal. “I want to save up $500” is not the same as “I want to save up $500 before August.” Give yourself a deadline; 6) Your goals should be written out. If you right-click here and choose “Save Target As”, you can download a goal planning worksheet. Use that worksheet to write out some goals and then display your goal sheet somewhere that you can see it.
Like with most things, it all starts with awareness. You need to have some idea of what you want out of your financial life and how what you want is different from what you have. What’s stopping you from having the financial life you want? What goals can you set to motivate you and move you toward having that life? If you need help determining some goals for yourself or developing an action plan to work toward those goals, you know where to find it.