Part of reaching your financial goals is creating a game plan for reaching them. While a long-term goal–like becoming debt-free or maxing out your retirement–might seem daunting, when you break it into smaller milestones, it feels more attainable and gives you something to celebrate along the way.
In this episode, I’m sharing my process for setting and reaching long- and short-term financial goals. I’m walking you through an exercise for determining your long-term financial vision and backwards-mapping your journey from there. Plus, we’ll discuss the importance of celebrating all the milestones you’ll reach as you go.
In this episode, you’ll learn…
- How a financial transformation starts with mindset work [1:06]
- How setting milestones can help you reach your long-term goals [4:55]
- How to get clear on your financial goals and the life you want to create [7:13]
- How to backwards-map your financial journey starting with your end goal [8:43]
- Why it’s important to set and celebrate milestones on the way to bigger goals [15:39]
- How to create a financial plan that gets you closer to these goals [16:42]
- How to analyze your current goals to make sure they’re aligned with your long-term vision [17:55]
If you’re ready to set and reach your long-term financial goals, tune in for this week’s episode.
Tune in to this episode to learn how to set and reach your long-term financial goals.
In the episode…
It can feel daunting to set long-term financial goals. You might look at your credit card balance and struggle to imagine it at zero, or you might find it hard to envision a future where you have a solid emergency savings fund. But even these major goals are attainable. You just need the right plan to reach them.
The key to hitting your big, long-term financial goals is breaking them down. When I work with new clients, I ask them to break their goals down into smaller “milestones,” points they’ll reach on the way to their eventual vision. This might mean paying off just a few hundred dollars in debt or saving $50 per month for emergencies. No matter how small, these milestones get you closer to your goals, and that means they’re worth celebrating.
If you want to set and reach your own financial goals, start from the end and work backwards. By planning this way, you’ll know you’re on track to your long-term goals even as you’re working towards your short-term ones.
Ready to set and reach your financial goals? Start by asking yourself these four questions:
“What do I want my finances to look like when I’m 80?”
Most of us never take the time to think this far into our financial futures. But if you really want to spend your golden years traveling the world, spoiling your grandkids, and enjoying your retirement, you need to start preparing today.
Take a moment to envision your ideal life at 80. Where do you live? What do you do with your days? What are you able to afford to do? Do you want to leave money for your children or nieces and nephews? Take all of these factors into consideration, and use them to define your end goal.
“What do I want my finances to look like in five years?”
Now that you’ve taken a long-term look at your financial life, let’s reel back a bit. Envision your life in five years. What do your finances look like? How much money do you make? How much do you have in savings? Have you invested in a house, a once-in-a-lifetime trip, a new car? Do you have a healthy emergency savings account? Are you investing?
Get clear on your vision, and then ask yourself, “What will I have to do to reach these goals?” Will you need to raise your prices or pursue a different career? Do you need to start saving for any of these goals today? This is the point in the plan where you can start breaking your goals into actionable steps.
“What do I want my finances to look like in one year?”
Next, let’s bring it in even closer. Where do you want to be in one year? Do you want to charge more for your services? Do you want to have a $5000 emergency savings fund? Do you want to get rid of your credit card debt? You’d be surprised what you can accomplish in a year, so don’t be afraid to set your sights high.
“What do I want my finances to look like in six months?”
This is the part where we get really granular. What financial goals do you want to accomplish in the next six months? Think small, like paying off $500 in debt or saving a month’s worth of expenses in an emergency fund. Set these small goals, and when you reach them in six months, take the time to truly celebrate them.
These goals might not seem like much, but they’re just the first step on the way to your one-year, five-year, and forever visions for your life.
Here are the takeaways I want you to remember from this episode…
- Your financial transformation hinges on your mindset. Start with mindset work, and go from there.
- The key to reaching long-term goals is breaking them down into attainable milestones.
- Every milestone is worth celebrating, no matter how small.
So set big goals, break them down, and keep moving forward. You’re well on your way to your vision!
If you’re ready to start reaching (and exceeding!) your financial goals, apply to work with me and let’s get you where you want to be.
The Transcript
Hi and welcome to Money Files, I’m Keina Newell from Wealth Over Now. I work every day with professional women and solopreneurs to help them get out of financial overwhelm and shame so they can experience more flexibility and ease with their finances. Are you ready to gain confidence and learn to manage your finances intentionally? Tune in and grab financial tips that will help you master the way you think about and manage your finances.
Welcome to episode four. If you didn’t go back and listen to those first three episodes and if you enjoyed them, I would ask that you go to Apple. Leave a review. Share this podcast with some friends because we are transforming relationships with money this year. We’re not just budgeting this year. We are going to transform your relationship with money and we want to move you beyond the cycle that you’re in when it comes to managing your finances. I want you to be able to think flexibly when it comes to your finances. This is not just about creating a spreadsheet. It’s not just about getting to the goal of having a thousand dollars in a bank account or not using your credit card. It’s not about being restrictive, it’s about tapping into expanding your mindset, about money and tapping into possibility things that you never knew you were capable of. I actually am going to read you guys something because this, I think, perfectly encompasses how I want every single client to feel.
If you listen to season one, there is an episode with my client, Lynae. I don’t know what episode it is. But go back, look for Lynae, L-Y-N-A-E. And today she left me a review on Google, and it says, Working with Keina at Wealth Over Now has been one of the best investments I made for myself. She helped me with financial visioning and planning so I can meet goals that I didn’t even know I had for myself. Not only did she help me with personal finances like paying off all credit card debt while creating an emergency fund, she also helped me plan for leaving my full time job so I can expand my small business. She motivates me and is one of my biggest financial cheerleaders so I can continue to grow my small business and find opportunities to create more wealth.”
Guys, this is what I want for you to be able to realize goals that you never knew you had because you’re in what I would call like financial smog. I just made up that word a couple of weeks ago because that’s what I feel like you’re in when you are focused on something like, I need to pay down debt. I’m really bad with numbers when that is the only thing that you can think about. You can actually see what’s beyond that. And transforming your relationship with money helps you see what’s beyond that smog. And sometimes it can be listening to a podcast. Or maybe it means actually investing and coaching so that you can get the support that you need. Like Lynae did, Lynae paid off over 9000 dollars worth of credit card debt while we were working together. She went down to part time in her full time job and was able to lean into her business and creating more income there and also creating time flexibility. She’s thinking about investing in property, and she couldn’t see any of that when she started working with me. Like that is what I mean when I say, Transform your life, transform your relationship with money. I want you to have a budget. Budgets are good, but I want you to have more than that. So I’m off my soapbox now. I just wanted to drop that there, and I think that will lead nicely into what I want to talk to you about today.
So in episode three, I talked to you about financial values before I ever start working with clients, and we start looking at numbers I should say before my clients and I ever start looking at numbers. I want to get to know them, and I want to get to know what’s important to them. And so one way that we do that is looking at financial values. And then we also start to define some goals. When people come to me, they’re like, I don’t know what my goals are or their goals just aren’t very specific. They may not be realistic, and I want them to take the time to think about their values and their goals because it’s going to shape how they spend their money and it’s going to shape how they think about even their current job or the role of the money in their business. Like, we want to be able to consider all of those things. So like I said, episode three, I talked about values. So if you haven’t listened to that episode, go back there and today we’re going to talk about financial goals.
So as I was preparing for this episode, I thought about a book that I read a long time ago when I was actually still in education. It was called Great by choice by Jim Collins, and I flipped through it really quick before I was writing my notes for this podcast episode. And one of the notes that I wrote in this book says Shape events don’t just react to them. Create the future. And when I read that, I was like, yes, that’s why we need financial goals. You’re not just going to stumble upon the results that you desire to create. You actually have to shape in your life financially what you desire to create, and that’s how you’re going to create your future. When you set these clear goals for yourself, you can even call them milestones. Then you’re actually going to have something that you’re working towards. I wasn’t able to leave my full time job last January just because I said I wanted to lose my job. No, I had to have milestones in place. I had to know how much I want in savings? How much did I want to be making in my business before I felt comfortable actually telling them, Hey, I’m resigning. Here’s my two weeks’ notice. I didn’t max out my retirement just by saying, Oh, I want to max out my retirement. No. I had milestones in place. I thought about, OK, well, right now I can do five percent, then I can do six percent. What percentage does that actually mean to max out my retirement? When I think about the nineteen thousand five hundred that it was in 2020 or 2021 and this year it’s twenty thousand five hundred dollars. So what does that mean if I want to max out my retirement? I didn’t just have an emergency fund that was built overnight, like I had to have milestones that were in place, I had to think about how can I use my income that I have in order to save 50 dollars every single paycheck, save a hundred dollars, every single paycheck, save five hundred dollars, every single paycheck. And the reason that I had those milestones is because I was able to think about what financial goals I wanted to set for myself. And I want you to be able to think about that for yourself, if you haven’t taken the time to really think about what do I desire to create in my life? This podcast episode is for you to think about what I desire to create in my life and I don’t want you to think about, Oh, but I don’t make that much money. Oh, I’m not sure I can do that. I’m not asking you how much you have or don’t have. I am asking you to sit impossibly to think about what I desire to create? And I want you to think about this in a way that allows you to plan backwards.
So when I do this exercise with clients, I don’t ask them to, Hey, tell me where you want to be in the next month or two months? No, I ask them, what do you want to create? Like, what do you want life to look like when you’re 80 years old? And if you stop and think about it, have I ever thought about what type of life I want when I’m 80 years old? Think about it. I know for myself, I think about wanting to be financially healthy. And when I think about that financial health and just so you guys know, I’ve thought about this probably a little bit more than you have, but I think about being able to have long term care if I need it. I think about being able to help my nieces and nephews. If I’m married, I want to be in a financial position where I could help my spouse. I want to think about being able to like travel, and I don’t want to have to think about it. I don’t I don’t want to think about money. Basically, I want to be financially healthy. So that’s what I want life to look like when I’m 80.
Now I’m going to ask you to pull back from eighty years old, and if you know that. That’s what I want life to look like. What does that mean for what I need to be doing right now? Where do I actually want to be five years from now? Where do I want to be a year from now? Where do I want to be six months from now? So like I said, I like to think about this backwards. Probably because I was in education and I really enjoy backwards planning, I’m like, OK, this is where you desire children to be at the end of the year. This is what it means. They would have to learn month to month, but the same thing is true. When it comes to our finances. We have to think about what milestones we would be hitting in different increments of time. It doesn’t mean that those milestones can’t shift. But if we’ve never conceptualized the things that we desire to create, then what are we actually working towards? You actually need a picture of what you desire to create for you to work towards that, and that applies for your personal finances. It applies to your business finances. If you think about five years from now, I’m going to ask you if you haven’t done it already. Think about where you desire to be when you’re 80 years old. What do you want your life to feel like? What results have you actually created, right?
And then think about five years from now? So what I ask clients to do, what I would ask you to do is like, really think about five years from now if you’re listening to this podcast in real time. It’s January 2022. So in five years from now, it’ll be January 2027. Like, how old will you be? What do you want life to look like in five years from now? When I did this for this podcast, I was thinking about, like five years from now, I would actually really like a new house. That is something that I would say is a goal for myself in five years from now. I’d like a million dollars in retirement. Then from five years, I want you to think about it. What do you want to create a year from now? How old will you be? What do you want life to feel like?
And what results will you have created so a year from now, it’ll be January 2023. And with my clients, I love to see, wow, what a difference a year makes, because a year of really working towards your finances is a night and day difference. My client, Brit, was actually thinking about him and realized that it was about a year ago that we started and I was like, Dang, what a difference a year makes, because in that year he’s increased his salary by eighteen thousand dollars. He’s paying down debt. He’s built a self concept of someone who knows how to manage his finances. Well, he doesn’t have this emotional relationship with money anymore, like he’s taking the emotion out of his finances. But going back to you in a year from now, think about January of 2023. What do you want to achieve? What does life look like? What results have you created? Are you traveling? Have you paid off all your debt? Have you saved ten thousand dollars in your emergency fund? Have you increased your prices in your business? If so, how much are they? How much money did you generate in your business the year before? So see, I’m asking you to take the opportunity to really paint the picture of what life looks like for you. Because after you identify what some of these financial goals are. We can start to align numbers in your spending plan, which we haven’t talked about yet, but that’s the reason that we want to set these financial goals and really be able to work backwards. They’re going to work in tandem with your values and they’re going to support you in creating a new level of financial awareness.
And then I’m going to ask you to bring it all the way back, and I’m going to ask you to think about June of this year. Where do you desire to be financially in June of this year? Maybe you’re thinking about it. I want to have paid off. A third of my debt. And then I would ask you if you said something like that. I actually want you to quantify what does that mean? The math teacher in me is like thirty three point three, three percent repeating what amount is that when you actually think about your debt, right? So let’s say that you have fifteen hundred dollars worth of debt and you said you want to pay a third of that off by June of this year. Well, that means that you want to pay off five hundred dollars by June of this year. So I want you to write to pay off my debt by five hundred dollars or pay down my debt by five hundred dollars.
Now that you have that level of clarity when we go back in to think about your spending plan. We can actually think about it. How much money would you need to put towards that debt to get it down by five hundred dollars in six months? And then if you keep working towards that plan, then in 18 months from now, we know that that debt is going to be paid off. It’s going to provide you with a different level of clarity if you said that you wanted to save six thousand dollars in your emergency fund. Right. If we know that it’s six thousand dollars and not just have an emergency fund. Well, we’re going to be able to do it. OK, you need to save a thousand dollars a month in an emergency fund, so if I know I’m saving a thousand dollars a month, we are going to actually be able to look at your numbers and say, is that realistic for you to save a thousand dollars a month with the money that you have coming in? Does that mean you need to generate more income? Oh, you have extra income that’s already coming in. OK, how are we going to use that extra income to work towards this goal?
So when you have clarity around what you desire to create, you can push yourself to be specific. And then we can be realistic in what’s really possible. And now we’re going to be able to have milestones and benchmarks to work towards over time. And this is where when I talked about in those beginning episodes of building your financial self concept, you’re going to be able to celebrate the wins that you have along the way. The wins that don’t have to look like, Oh my goodness, I saved ten thousand dollars. I paid off all of my debt because we’re going to set milestones that look like financial goals for you in between the big goal of paying off ten thousand dollars worth of debt or saving ten thousand dollars. We’re going to have goals that we’re going to be able to celebrate before we get to that point.
So when I’m talking about you creating financial goals, I’m doing it in a way that I want you to think about, where’s the big picture where I desire to be when I’m 80 years old? What does life look like? What milestones like in those other buckets, am I hitting five years from now, a year from now, six months from now? What milestones am I hitting? And then finally, we get to come back to like this six month bucket and say, OK. When I create my financial plan, what is going to need to be in place so that I can see these goals? Be achieved. And then in six months from now, once you’ve achieved those goals, we then get to go to your one month bucket. And reassess, because now those one year goals become six month goals, and that’s how the process continues. And once you hit your six month goals, like when I think about Lynae, the client that I was telling you about earlier. In the very beginning, like her goals or paying down debt, have a thousand dollars in savings. What some may call like small goals, but those smaller goals have helped her compound her results over time. She was able to leave her job. She’s been able to pay off nine thousand dollars worth of debt. She’s been able to increase the prices in her business so she could see that money has purpose in her business and. The purpose of the money in her business is to take care of itself, but also be able to pay her on a biweekly basis and push her closer to her goals.
So if you haven’t set financial goals for this year, maybe you have already set financial goals and you have a big goal to pay off all your credit card debt. I want you to poke holes in it. And really think about it. How specific have I been? Is there an opportunity for me to be more specific? What milestones will I hit along the way? How are these goals going to show up in my budget? If when you’re doing this exercise, you think about being stuck or you’re like Keina. I don’t know what I want to be doing in five years. Don’t get bogged down in that, because this is literally just you massaging your financial muscle. To set a vision for yourself. That’s how I think about financial goals, are you setting a vision for yourself? And once you have that vision on paper and you start working towards the first part of it, which is the six month goals, things are going to evolve, you’re going to have questions that you start to ask yourself. Things are going to come up as you start your journey and you’re going to be like, Oh, maybe this is true now or that’s prompting me to think about maybe I want to actually apply for new jobs because I desire to earn more money. But now you’re going to be asking different questions. You’re going to be asking yourself, What do I need to do to prepare for these goals? Maybe I need to have more financial conversations. Maybe I need to actually invest time in reading a book, or maybe I desire to actually go back to school. Your financial goals don’t just have to be about saving money and paying down debt.
Thank you so much for listening to Money Files. If you’re ready to take the next step to reach your financial goals, head to www.WealthOverNow.com/Appointment and let’s get started.
