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Lost in the money jungle? The importance of goal setting to get out of debt, save money and achieve your dreams.
By Tammy may


Goal setting for money managementFor many people, money management feels like stumbling through a dark forest. They find themselves navigating without a map in unfamiliar territory. Part of the problem is that most people don’t have a clear destination in mind. With no specific purpose they might wander for years, covering a lot of ground but never really getting ahead. It's a fact that only a small portion of the population live on a budget.

MyBudget clients know that budgeting cuts a clearer path through the money jungle. With a budget in place, you know where you’re heading and how you’re going to get there.

But even MyBudget clients can sometimes get distracted, especially when they find that their debts are being paid off more quickly than they expected. After years of struggling to make ends meet, they suddenly have savings and surplus funds to play with. What comes next? An investment property? A private school for the kids? Topping up super? An overseas holiday?

The solution is goal setting

Goal setting is a vital component to success in life as much as in personal finance. The statesman Henry Kissinger once said, “If you don’t know where you are going, every road will get you nowhere.”  Managing your money without specific goals is like going on a road trip without a destination. There’s a good chance that your route will be pitted with detours and back roads.

The benefits of goal setting

Goals provide focus. You move towards the things you focus on. Have you ever ridden a bicycle through an obstacle course? The surest way to collide with the witches hats is to focus on them. On the other hand, if you keep your head up and eyes focused on a point in the distance, you’ll find that you weave through the hats quite effortlessly. The same principle applies to your finances: you can let your focus wander or you can set your sights on a target.

Goals provide a map. The more specific a goal is, the more powerful it is. A goal should not only describe the endpoint, it should also detail how you will get there. Perhaps it’s your goal to buy a new car. That’s a great start, now get specific. What make and model is the car? How much does it cost? When will you buy the car? How much do you need to save from each pay packet?

That’s not to say that your plan can’t be flexible. Your old car may break down and need costly repairs or your best friend may invite you to their wedding in Fiji. That’s ok — plans can be adjusted to move with life. The plan may change, but the goal remains the same!

Goals keep you motivated. Problems, challenges and distractions are inevitable, but they’re much easier to overcome when you have a goal to focus on. Sacrifices feel less painful, temptations are less attractive, and obstacles shrink in the face of focus and determination.

Goals turn ideas into action. When you commit to a goal and decide on a course of action to achieve it, it’s like hoisting a sail into the wind. You’ll be surprised by how quickly you start achieving your goals once you get set your mind to it.

Let’s get started…

Visualisation exercise: What does your ideal life look like? Visualise where you’d like your money to take you and start jotting down some notes.

Does it include being debt-free? Perhaps there are places you’d like to visit, concerts you’d like to attend, sports or hobbies you’d like to be involved in. Maybe you see yourself owning a car, or a boat or renovating your home. You might want to send your kids to a different school or take them on a holiday.

Think big and small. Your goals do not have to be grand or complicated to be worthwhile. In fact, it’s important to have a mix of big and small goals.

This is your life and your financial destinations are yours for the choosing!

Start thinking about where you’d like your money to take you and next week we’ll get into the nitty-gritty with a step-by-step guide to goal setting.

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