Thursday, November 23rd, 2017

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Set Yourself Realistic Goals

Set goals that are realistic but ambitious.Life is driven by expectations as much as reality. A widely praised rookie entering his first major-league season has a far greater weight on his shoulders than a relative nobody. In the financial markets, a company’s absolute performance is often far less significant than its performance relative to expectations – a company that posts lower losses than expected might perform better than one that earns money but fails to meet analysts’ goals.

When managing your own money and trying to stay or get out of debt, it’s important to set goals and to make sure that they are actually achievable. Setting your bar too high means you that will inevitably trip over it, and the resulting despondency or disappointment may cripple your ability to keep pressing on.

For instance, take savings targets. It’s important to set aside a reasonable amount of money each month to prepare for major purchases like a house or a car, and to have a nest egg that will sustain you in lean times and in retirement.

If you aim to save 50 percent of every paycheck, though, it’s going to be difficult – provided you have a normal level of expenses. Very few people live on just half of their take-home pay, and those that do tend to be rather high-earning and extremely frugal.

The fact is, you very likely won’t save 50 percent, or even 40 or 30 percent. If you commit yourself to such a goal, you’ve set your bar way too high. If and when you fail to save that much, you may consciously or unconsciously decide the whole savings project isn’t worthwhile.

Settting your goal to a more realistic level, like 10 or 15 percent, makes it easier to achieve, giving you the beneficial optimism of meeting your goals.

This doesn’t mean you should set all your targets absurdly low, so that it’s too easy to get to them. But an impossible goal creates a sense of frustration that can permeate your life and your attitudes. This is particularly true when it comes to money, which many people rate as the most stressful aspect of their daily lives.

So set yourself moderately ambitious goals when it comes to saving, spending and paying down debt, then ramp them up over time as you hit your targets. In the end, it will reduce the chance that you fail immediately and then abandon the entire endeavor. ADNFCR-3389-ID-19929191-ADNFCR

Use the Young Money Savings Goal Calculator.

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One Response to Set Yourself Realistic Goals

  1. phillip says:

    this is very helpful.

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