You've probably seen more than one headline asking whether you are on track with you finances and asking you to compare your finances to this age group or that demographic. While these headlines and articles are well-meaning, they're rarely ever reassuring. In fact, they're mostly anxiety inducing!
Don't get sucked into the web of comparing your finances to someone else's or measuring your financial progress against arbitrary milestones. Instead, take this 3-step approach to create meaningful financial goals that align with what's important to you and support experiencing authentic financial wellness.
Step One
Identity and write 3 to 5 goals that are important to you, making a point to identify goals that are meaningful to you and not financial in nature.
Example goals: I want to spend more time visiting family,, I want the security and stability of my own home, I want to live in an area with a highly rated school district, etc.
Step Two
Make the financial connection to your goals. Once you've identified goals that are meaningful to you, it's time to identify the financial requirements necessary to fulfil your goals.
Example financial connection to goal: I need an annual travel and related expenses budget of $5,000 to ensure I visit family members at least once a year.
Step Three
Make a plan for how you will fulfill the financial aspect of your goal and how you'll measure your progress against your goal.
Tip: Remember to apply S.M.A.R.T. principles! (SMART stands for Specific, Measurable, Attainable, Relevant, and Time-bound)
Example plan: I will build an annual travel budget of $5000 by the end of 2026 (2 years from now) by reducing my monthly entertainment budget by $125, eliminating $80 of monthly subscriptions, and setting aside $200 a month from my upcoming raise.
Tip: Don't expect to achieve success overnight. Your progress will be gradual and may not always go perfectly to plan. It's ok to make adjustments along the way and remember to celebrate!
Experiencing authentic financial wellness is about aligning your finances with what matters to you. Using this 3-step approach will ensure you compare and track your financial progress against your own standards/expectations and you always align your finances with what matters to you, not arbitrary milestones or what "should be."
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