Goal setting and budgeting are two of the primary foundations that help you take control of your financial independence and future.
But there are a number of common traps to be aware of when it comes to setting goals.
Understanding and awareness of these mistakes will help you to sidestep these pitfalls when it comes to hitting your goals.
1. Your goals are too narrow
Creating goals can work wonders because they can cleverly help you to focus your time and resources on something specific. But if you set a goal that is too narrow, you may miss the broader objective and intention of your goal in the first place.
Unfortunately, this can lead to wasted effort and disappointment.
For example, forcing yourself to save $400 a month allows you to direct your efforts in a disciplined way, but you may lose sight around what you want to achieve if you solely focus on hitting that dollar figure.
So, it may be helpful to take a step back and reassess what the end goal is.
Whether it's saving for an overseas holiday, contributing to your nest egg or growing a respectable home deposit, reminding yourself of your end goal will help give you clarity around what you're trying to achieve and help you to get there.
2. You have too many goals
Having goals galore can be overwhelming and might distract you from going after what you really want.
Setting a small list of goals might help you to better focus your energy, attention and willpower.
Take, for instance, the goal-setting advice Mike Flint sought from billionaire investor Warren Buffett. Flint asked Buffet for help around chasing his dreams.
Buffett told Flint to write down 25 goals and then circle his top five, identifying the five as the ones he wanted more than anything else in the world.
Flint obliged and discussed his approach with Buffett. Flint said he would focus on his top five as a priority, but also set aside some effort for his remaining 20 goals too.
Horrified, Buffet told him to ditch anything not in his top five goals.
Buffet said: "Everything you didn't circle just became your avoid-at-all-cost list. No matter what, these things get no attention from you until you've succeeded with your top five."
3. Your goals are all pie-in-the-sky goals
Setting lofty, overly onerous and unrealistic goals can potentially wreak havoc on your financial confidence.
Your goals should seem like a stretch, but they shouldn’t be impossible.
4. You’ve miscalculated how long it will take to achieve your goal
If you don't estimate the goal completion time accurately, it can be discouraging when things take longer to achieve than you think they should.
5. You’ve adopted someone else’s goals for yourself
It's common for people in your life to share their journey with you and influence how you approach your financial path.
This comes from a good place from the people close to you. They want to share the missteps they have encountered, so you can avoid them too. Or they want to help you benefit from the strategies that have worked for them.
While it's beneficial to learn from other people, if you adopt other people's goals, you might not be picking the goals that best suit your situation.
Only you know what you want and deserve, so it's important your goals always remain steadfastly your own.
6. You plan for the sake of planning
There is no doubt that planning is key when it comes to improving your financial confidence and creating your financial future.
Say your dream is to start a tree-lopping business. You may have developed a business case, crunched the numbers, and analysed your target market, and you know exactly what you want your business to look and feel like.
But it also requires doing something uncomfortable, taking a leap of faith and giving it a go. All the planning in the world won't help you get your dreams if it only exists on paper or in your head.
The only way to achieve your goals is to go after them, not just plan them out.
7. You don’t respect your failures
It's human to fail. And in failure, we can often learn valuable lessons to help avoid the same missteps and strengthen our financial confidence and future.
At some point it's likely your goals and budget will falter. It's okay. Just take what you can from the journey and apply these lessons next time.
In summary, don’t let your financial goals slip through your fingers.
By acknowledging and hopefully side stepping these goal-setting mistakes you’ll be on the path to financial security and freedom.
