Part 1: Turning Dreams Into Plans

Get from dreams to real financial plans

Let’s begin the process of getting financially fit.

To begin, we need to evaluate your relationship to money. It’s important to reflect on your feelings about money, look at why it’s important to save and set personal financial goals. Working through this process will give you a solid foundation so you can make thoughtful decisions about your finances.

Most of us dream of what our future will look like. Perhaps you’ve thought of taking a well-deserved vacation, owning your own home or sending your children to college.

Whatever your financial dreams are, the first step to making them real is to know yourself. How do you feel about money, spending and budgeting?

Take a few minutes to answer the questions on the following worksheets to begin the process of turning your dreams into a plan.

Goal Setting Worksheet – The Future
Goal Setting Worksheet – Present
Messages About Money Worksheet
Understanding Your Relationship with Money Worksheet

Personal Mission Statements

Defining Your Goals

Let’s look at the benefits of creating personal mission and vision statements. We’ll show you how to create them, and highlight how you can use them to bring clarity to your own objectives and goals.

Why Create Mission and Vision Statements?

All of us have very different ideas about success. What’s important, however, is that you spend time defining your version of success. Otherwise, how will you understand what you should be working toward, and how will you know if your decisions are helping you move toward your goals?

Used as part of your personal approach to goal setting, mission and vision statements are useful for bringing sharp focus to your most important goal, and for helping you to quickly identify which opportunities you should pursue.

Shaping this goal into a mission statement helps you keep it at the front of your mind, and helps you focus your energy and resources upon it. Without this focus, you can be distracted, or you can spread your effort too thinly across multiple competing goals.

By creating a personal mission statement, you make one of your personal goals supremely important. This gives you the best possible chance of achieving it, which is essential for some types of goal. However, if you focus exclusively on one goal, you’ll inevitably have to de-emphasize others. Make sure that you’re happy to do this, and make sure that people who are important to you don’t suffer as a consequence.

Mission Versus Vision

So, what’s the difference between a mission statement and a vision statement?

Mission statement – This defines your purpose. It’s what you ultimately want to achieve in your life or career, expressed in a specific, measurable way.

Vision statement – This is a bit more emotional. Here, you define your core values, and how you’ll apply those values to your mission.

As your career develops, your goals and objectives are likely to change too. So make sure you revisit your mission and vision statements regularly, and update them as required.

Personal Goal Setting

Planning to Live Your Life Your Way

Many people feel as if they’re adrift in the world. They work hard, but they do not seem to get anywhere worthwhile.

A key reason that they feel this way is that they haven’t spent enough time thinking about what they want from life, and haven’t set themselves formal goals. After all, would you set out on a major journey with no real idea of your destination?

Probably not!

Goal setting is a powerful process for thinking about your ideal future, and for motivating yourself to turn your vision of this future into reality.

The process of setting goals helps you choose where you want to go in life. By knowing precisely what you want to achieve, you know where you have to concentrate your efforts. You’ll also quickly spot the distractions that can, so easily, lead you astray.

Why Set Goals?

Top-level athletes, successful business-people and achievers in all fields use goal setting. Setting goals give you long-term vision and short-term motivation. If focuses your acquisition of knowledge, and helps you to organize your time and your resources so that you can make the very most of your life.

By setting sharp, clearly defined goals, you can measure and take pride in the achievement of those goals, and you’ll see forward progress in what might previously have seemed a long pointless grind. You will also raise your self-confidence, as you recognize your own ability and competence in achieving the goals that you have set.

This is why we start the process of goal setting by looking at your lifetime goals. Then, we work down to the things that you can do in, say, the next five years, then next year, next month, next week, and today, to start moving towards them.

Starting to Set Personal Goals

You set your goals on a number of levels:

  • First you create your “big picture” of what you want to do with your life (or over, say, the next 10 years), and identify the large-scale goals that you want to achieve.
  • Then, you break these down into the smaller and smaller targets that you must hit to reach your lifetime goals.
  • Finally, once you have your plan, you start working on it to achieve these goals.

Key Points

Goal setting is an important method of:

  • Deciding what you want to achieve in your life.
  • Separating what’s important from what’s irrelevant, or a distraction.
  • Motivating yourself.
  • Building your self-conscience, based on successful achievement of goals.

Set your lifetime goals first. Then, set a five-year plan of smaller goals that you need to complete if you are to reach your lifetime plan. Keep the process going by regularly reviewing and updating your goals when you do so.

If you don’t already set goals, do so, starting now. As you make this technique part of your life, you’ll find your career accelerating, and you’ll wonder how you did without it!

Step 1: Setting Lifetime Goals

The first step in setting personal goals is to consider what you want to achieve in your lifetime (or at least, by a significant and distant age in the future). Setting lifetime goals gives you the overall perspective that shapes all other aspects of your decision making.

To give a broad, balance coverage of all important areas in your life, try to set goals in some of the following categories (or in other categories of your own, where these are important to you):

  • Career – What level do you want to reach in your career, or do you want to achieve?
  • Financial – How much do you want to earn, by what stage? How is this related to your career goals?
  • Education – Is there any knowledge you want to acquire in particular? What information and skills will you need to have in order to achieve other goals?
  • Family – Do you want to be a parent? If so, how are you going to be a good parent? How do you want to be seen by a partner or by members of your extended family?
  • Artistic – Do you want to achieve any artistic goals?
  • Attitude – Is any part of your mindset holding you back? Is there any part of the way that you behave that upsets you? (If so, set a goal to improve your behavior or find a solution to the problem.)
  • Physical – Are there any athletic goals that you want to achieve, or do you want good health deep into old age? What steps are you going to take to achieve this?
  • Pleasure – How do you want to enjoy yourself? (You should ensure that some of your life is for you!)
  • Public Service – Do you want to make the world a better place? If so, how?

Spend some time brainstorming these things, and then select one or more goals in each category that best reflect what you want to do. Then consider trimming again so that you have a small number of really significant goals that you can focus on.

As you do this, make sure that the goals that you have set are ones that you genuinely want to achieve, not ones that your parents, family, or employers might want. (If you have a partner, you probably want to consider what he or she wants – however, make sure that you also remain true to yourself!)

Step 2: Setting Smaller Goals

Once you have set your lifetime goals, set a five-year plan of smaller goals that you need to complete if you are able to reach your lifetime plan.

Then create a one-year plan, six-month plan, and a one-month plan of progressively smaller goals that you should reach to achieve your lifetime goals. Each of these should be based on the previous plan.

Then create a daily To-Do List of things that you should do today to work towards your lifetime goals.

At an early stage, your smaller goals might be to read books and gather information on the achievement of your higher level goals. This will help you to improve the quality and realism of your goal setting.

Finally review your plans, and make sure that they fit the way in which you want to live your life.

Staying on Course

Once you’ve decided on your first set of goals, keep the process going by reviewing and updating your To-Do List on a daily basis.

Periodically review the longer term plans, and modify them to reflect your changing priorities and experience. (A good way of doing this is to schedule regular, repeating reviews using a computer-based diary.)

Continue to next financial planning lesson