How to get your money goals sorted: Part 2 of Money Management Series

WELCOME TO PART 2 OF THE MONEY MANAGEMENT SERIES

Today we will be looking at how to get your money goals sorted in readiness for creating your budget next week. Exciting times people!

Last week we learned how to calculate your net worth.  You’re going to want that information with you in order to get your money goals sorted because your current net worth is your starting point. Your ‘Day 1’ of really handling your money well and in a way that will lead you to live the life you want.

Not calculated your net worth yet? Then now’s the time, if you need some help with it then my post on how to calculate your net worth will give you all the information you need.

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SO WHAT ARE MONEY GOALS?

Money goals are pretty darn important. So important that they often overlap with our ultimate life goals.

The majority of people’s life goals do intertwine with their money goals because, whether we like it or not, most of our life is governed by money.

Now people often don’t like hearing that but it’s true. There is very little in our lives where money does not have a direct or indirect impact. Including both positive and negative impacts. Remember more money doesn’t always equal positive things.

What we are aiming for is enough money.

Enough money to keep you in good health, to give you a safe and warm place to live. To allow you to do things that excite you or things you are passionate about. Enough money so you can afford to really help others around you.

Money goals help us understand what we actually want to spend our time doing and help us reach our ‘enough money’. They stop us from falling into the trap of working a job we don’t care about until retirement because we think we don’t have enough money and need to earn more.

Money goals facilitate us to live a life we actually love.

Pretty useful things eh!

HOLD UP THERE, I DIDN’T LIKE YOUR EARLIER SUGGESTION THAT MONEY CONTROLS US:

I’m guessing you’re referring to the “most of our life is governed by money” statement. Note how I didn’t write that money governs us, or controls us. I wrote that our life is governed by money. And you know who controls their money right.

You.

That’s right. You control your own money, which in turn governs what you can do with your life. But you’re in the driving seat.

An example if you please:

Mary works super hard and earns a decent wage. However, she never seems to have enough money to do the things that really matter to her. (She loves skydiving but it’s pretty expensive).

Jane also works super hard, earns a good wage and loves skydiving. (Mary and Jane have been skydiving together quite a few times actually). Jane often gets to go skydiving because she’s in control of her finances. Whilst Jane knows that it’s money that allows her to go skydiving, she also knows that she’s the one earning the money and managing the money, so ultimately she can control the direction her life takes. Including how often she goes skydiving.

See how Mary is not controlling her money so it ends up controlling her. Whereas Jane is very good at money management and so governs her own life and it’s direction.

So when you read the statement that “most of our life is governed by money” you should be excited because that means you as an individual have ultimate control.

You can control how much or how little money you have and you can also control your mindset towards money.

LET’S GET OUR MONEY GOALS SORTED NOW!

Grab a pen and paper as you will probably want to write your thoughts down.

It’s time to get a little deep.

ASK YOURSELF THESE THREE QUESTIONS:

If money was no object what would you do?

If you answered sit on a beach and relax then just consider why. Is it a slower pace of life you’re looking for? Traveling? Living in a hot climate?

Sometimes when we get asked that question we view it with such disbelief that our answer is more like what we would do in the month following money being no object. Rather than what we would do for the rest of our lives.

So rethink your answer if all you came up with was a holiday.

Next question.

You can do any activity (or activities) in the world as a job but you will only ever be paid minimum wage no matter what you choose, what would you do?

When I say any activity I really mean it, even if it isn’t something we would traditionally class as a job, maybe it’s more like a hobby. For example stay at home Mum, gardener, hotel reviewer, book reviewer, knitter. Okay they are not the best selection but c’mon use your imagination.

Final question.

What do you need to feel safe?

This one is really, really tough. But just write down whatever comes into your head. Remember nothing is too crazy!

MY ANSWERS:

Just in case anyone is super confused by the questions or if you’re like me you just need an example to get you started. Here are my answers. They are a little paraphrased because these things can get quite personal but here you are.

If money was no object what would you do?

First I would live in an RV for a few years and travel, experiencing different places. Particularly travelling across America.

Then I would buy a farm where I could farm (funnily enough) and give my boyfriend the opportunity to event horses again if he desired.

I would also build my dream eco house on that farm.

You can do any activity (or activities) in the world as a job but you will only ever be paid minimum wage no matter what you choose, what would you do?

It would be a mixture of small-scale farming, animal rescuing, people educating, eco developing homes and probably stay at home Mum one day (many) years in the future.

What do you need to feel safe?

Enough space to grow food and be able to practice some form of self-sufficiency. Enough money to live off. People who love me.

Don’t worry if your answers don’t look anything like mine. It would be very weird if we all wanted the same out of life. They are just to give you an idea.

Next, we will turn those answers into actual lives we can work towards!

IDENTIFY THEMES:

Hopefully, a few themes should jump out at you when you look over your answers.

I’m going to identify the themes from my own answers so you understand what I mean as an example. But basically you are looking to see if a particular lifestyle or way if living becomes apparent.

Looking through my answers I can see that my main theme is growing food and living on my own piece of farmland. (Just so you know I assume that I would be able to rescue animals and be a stay at home Mum if I lived on a farm, it’s kind of a package in my eyes). There is also the building of my own eco home which ties in with the whole homestead kind of lifestyle.

Okay so that is clearly a lifestyle I am craving.

There is also a ‘bucket list’ item of RVing around the USA.

Plus there are two very important things from the need to feel safe question that haven’t been addressed yet.

Enough money to live off and people who love me.

Now in my eyes enough money to live off means I don’t have to earn any more money at all, I would already have enough to sustain me for as long as I live. This is called financial independence something I really think everyone should aim for in some capacity.

People who love me, well what I’m referring to here is having a community of my family and friends. Now some people may say this isn’t a money goal at all but I would disagree. You see I need to know that financially I am able to go visit and spend time with the people I love and who love me.

See how the main theme is living an eco, homestead style life on my own farm where I am financially independent. But I also have a bucket list item I want to do (RV around the USA).

CREATE GOALS YOU CAN WORK TOWARDS:

Now its time to break this all down into things we can work towards. I can’t really tell you how to do this because each person’s goals will be so unique and there are many different ways of doing that same thing. But I will demonstrate with my own goals so you can see how I plan to do it and then hopefully you can create your own money goals.

I tend to try and write my goals in some form of chronological order, but if you prefer you can do it in order of your most important goal.

Goal One: Reach Financial Independence through earning money with my educational blog

Note how I pulled in the one activity I didn’t discuss earlier, educating people. Also this may seem like a big goal that encompasses too many aspects to some of you to be one goal. However, I have already extensively developed my plan to reach financial independence separately and so feel comfortable having such a multifaceted objective as one goal.

But basically I need to earn a decent wage and invest well, and blogging is how I intend to do it. You could break this goal down into small chunks if you prefer but that’s up to you.

Goal Two: RV around America

I almost want to get this goal done sooner rather than later just because the majority of my other goals involve developing a life in a fixed location (the farm).

Goal Three: Buy and live on a farm

This probably doesn’t need much explanation but it pretty much encompasses all of the other things I want from life.

PLACE A MONETARY VALUE ON YOUR GOALS:

Now its times to break the goal down and value it. Basically figure out how much money it’s going to take to complete!

It can feel a bit clinical to put a number on everything but I normally find it makes the goal seem much more attainable.

Also there may be things that look like you couldn’t put a number on it but try. For example one of my things was to be able to visit my friends and family. Now I have actually factored this in with attaining financial independence but if you have this as a singular goal then you would want to work out how much it would cost to visit them to start with. But then maybe you would want to stay for a month at a time so you need a job with good holiday or that allows you to remote work. See how the goal has developed. Now you possibly need a new job plus a certain amount of money. Really think about what you truly want and how much money, and life steps you need to get there.

Once again I will value my own goals to demonstrate the process.

MY GOALS VALUED:

Goal One: Reach Financial Independence through earning money with my educational blog

Using the 4% rule I know that to cover the bare minimum of my expenses I need to have £9,600 per year, which would be £240,000 saved and invested.

Ultimately I would like £40,000 available per year for my boyfriend and I to live a good life, again using the 4% rule this would be £1,000,000 saved and invested.

Using Networthify I worked out that the blog needs to be making £23,000 after tax each year for me to have £240,000 saved for financial independence in 10 years time (I already have some savings). In order to have £1,000,000 saved for financial independence in 10 years time, the blog needs to be making £115,000 per year after tax. (Not completely out of the question if you consider how much people like Michelle from Making Sense of Cents makes. She is a total girl boss!)

Goal Two: RV around America

So I just had a quick look on American eBay and I’ve seen loads of RVs that look great for around $15,000 (about £12,000). Plus say a year’s worth of living expenses which is about £20,000 for the boyfriend and I. We would need around £32,000 to RV around America for a year. Well that’s definitely doable!

Goal Three: Buy and live on a farm

So around where I live now we would be looking at £700,000 plus for the sort of mini farm I would want. We already have a house worth at least £250,000 (we have renovated it so should be worth more now) so I need an additional £450,000.

So my ultimate goals total money value is £1,482,000.

That’s not actually a crazy amount. Plus don’t forget that my minimum goals amount is £722,000. Again I think that’s totally doable.

Having gone through and put a money value on my goals I can see that I need to focus on saving significantly whilst increasing my income substantially. (I mean my income is zero right now, so err if anyone wants to click on some of my affiliate links… just saying…)

Others of you may look at your goals and realize you actually are already in a place where you can start living your dream life. In which case you should totally go ahead and do it!

But if you are looking at your goals and thinking you will never get there then stop that kind of thinking right now and move onto the bonus step below. In fact I think everyone should check out the bonus step because it’s something we should do with all our goals and life really.

BONUS STEP:

See if there is an alternative way of realizing the goal faster, which would require less money or time (if time is an issue) without sacrificing the quality of the end product/experience.

So I want to RV around America. I could make that goal a lot cheaper by buying a cheaper RV. That could knock £5,000 off. Plus my boyfriend and I could work a bit while we are out there which could halve our living expenses. Working out there could also be really fun as it would allow us to meet more people and experience American culture better. By working out there and buying a cheaper RV the amount we would need would comes to £17,000 rather than £32,000.

See, now try and think outside the box with some of your goals that seem impossible. Make them possible!

Like if you want to live debt free have you considered moving into an RV yourself to save money on living costs, that’s what this couple did.

Have you done something crazy, unbelievable or really outside the box to realize a money goal? If so tell me about it by emailing me at sammy@wellandwealthy.org and you could feature on the blog!

Okay so I really want you guys to comment below your money goals! Also if you’re struggling comment below too so we can all help you out!

Plus if your seriously stuck then email me at sammy@wellandwealthy.org honestly I really want to help you!