Achieving Financial Goals – The Process Remains The Same

I do not like distractions.  When I am working on an article, I don’t want to listen to music.  When I am watching television, I do not want to hear the noise of the dish washer.  My mind is of the proverbial “one-track” variety.  Multitasking is not for me.

When it comes to the management of our finances, I find things work best when I’m focused – intensely focused – on either one goal – or a few, very closely related goals.

For instance, let’s assume my goal is to be debt free.  Well, I might have two credit card debts, a car payment, and a student loan.  Each of these debts are part of my debt repayment plan – but my main goal is to be debt free.

I will be focused on achieving that goal.  Along the way, the actual plan that I put in place may call for some actions not directly related to debt reduction (say, saving up for an emergency fund), but my goal – and my focus – will remain the same.

I use the following process:

Identify goal.

Establish time frame.

Create plan.

Implement plan.

Anticipate obstacles.

Remain resolute.

Accomplish goal.

Repeat for next goal.

I’ll use the “to be debt free” goal as an example.

Identify goal – to be debt free

Establish time frame – two years

Create plan – budget, emergency fund, pay lowest balance first, roll payments from paid-off debts into existing debts, etc.

Implement plan – follow through, communicate with spouse, weekly budget analysis

Anticipate obstacles – miscellaneous expenses, job-loss, friends that overspend

Remain resolute – reflect on progress, redouble efforts when facing setbacks, find encouragement from like-minded

Accomplish goal – share good news, celebrate, enjoy

Repeat for next goal – don’t stop, think big, educate self

Over and over, I find myself returning to this tried-and-true process.  When I’m feeling overwhelmed, thinking about saving for retirement, increasing income, managing investments, and the dozens of other financial management areas of my life – I stop.  I go back to my process.  I break each area down into a manageable goal, put a plan together to achieve that goal, and implement that plan.

Obviously, there will be times when goals (and thus planning) will, in a sense, overlap.  For instance, I currently have a goal of saving enough money to buy a newer automobile for my wife.  Well, that goal overlaps with my goal of maximizing retirement account contributions.  Both of these goals are important, but I’m not a big fan of dividing my focus.  So, for the first six months of this year, my focus will be on saving enough money to buy a newer automobile for my wife – and the last six months will be on maximizing retirement account contributions.

Now, I realize that I could focus on both goals at the same time, but that’s just not how my mind works.  Instead of putting $200 in savings for the newer automobile, and $200 in my Roth IRA, I’d rather put the full $400 in savings, thus focusing on just one of the two goals.  Then, six months from now, I’ll turn my attention towards retirement and put the full $400 in the Roth IRA.

Why?  I don’t really know why this works so well for me, but it does.  After nearly six years of tracking my finances, I look back and see that I always accomplish more when I am focused on time-based goals.  I just do.

When it comes to paying off the mortgage, that’s a very long-range goal – and overlaps several, much shorter-range goals.  This is my one goal that doesn’t fit neatly into my process, just because it’s so big and will take such a long time to accomplish.  Right now, paying off the mortgage isn’t at the tip-top of my priorities list, but one day it will be.  When that day comes, I’ll laser-focus on it – and pay the thing off.

(Please note, I still send extra towards my mortgage each month, but I do so as a part of my regular budget.  I have yet to turn my full attention towards our mortgage debt.  That day, to be sure, is coming.  Right now, however, increasing our cash reserves is a priority.)