Making the most of your money never stops. Once you tackle a big goal like paying off debt or funding a dream trip, there’s often another goal right behind it. And for long term financial goals like investing for retirement, buying your dream house, or funding your kid’s education, it takes many years of saving to actually reach your goal.
When the reward is so far away, it can be difficult to stay on track. After the initial enthusiasm fades, it’s easy to just order another drink on a night out, even if it will put you over budget and impact your savings goal. Why save for a goal so many years in the future when you can enjoy your effort right now?
But in order to reach your long term financial goals, it’s essential that you do the right thing day to day. That’s why it’s important to stay excited about your long term financial goals. Let’s dig into some of the ways our personal finance blogging community stays motivated to reach big, ambitious financial goals.
1) Create Short Term Goals
If it’s easier to keep short term goals as compared to long term financial goals, why not break down long term goals into shorter ones? Sarah at Suburban Finances does just that. “I stay focused by making progress toward them regularly, breaking them down, and focusing on those small wins.”
Take saving for retirement as an example. How much money do you want for retirement, and by what age? What do you need to save this year, and this month, in order to make that happen?
Reaching for a smaller goal helps Sarah so she doesn’t “get lost in how far away the bigger goal is.” Since reaching a long term financial goal requires daily action, make a daily target to stay on track.
It’s not just enough to have a goal. You also have to measure your progress. So for Eliza at HappySimpleLiving, the best way to stay motivated on long term financial goals is to calculate her net worth at the beginning of every month:
“I set annual goals, and I also try to inch up that bottom line each and every month. This habit has helped me because it keeps me very honest. In the past I might think, “Good for me; I saved $200 this month!” without acknowledging that I had charged $400 worth of stuff on credit cards. Now it’s all there in black and white, which has helped me stay focused on eliminating debt and building wealth.”
Similarly, Dee at Color Me Frugal calculates her net worth every quarter. “Every time we run the numbers it’s a good reminder of where we’ve been and where we are headed financially.
If we stopped calculating our net worth I think I’d feel like a car without a steering wheel. I’d be able to move, but I wouldn’t be nearly as easy to have an impact on where I’m going! Running the numbers on a regular basis helps keep our head in the game, so to speak. It’s a reminder of the fact that we have goals and dreams, and we want to achieve them before we’re super old and gray!”
With long term financial goals like growing your net worth, checking it regularly helps you understand how your daily behavior impacts your long term financial goals.
3) Use Financial Tools to Make Better Decisions
For Paul at the Frugal Toad, calculating net worth is nice. But in order to meet his early retirement goal, he uses a retirement planner to both monitor his progress and to project future income and expenses. When there’s a financial decision to make, he can investigate the long term financial consequences of the decision.
“Having a plan is a big part of what keeps me motivated. I use Quicken to keep track of my retirement accounts and I also use the retirement planner to project future income and expenses and also to monitor my progress. I use the what-if scenario to see the impact certain financial decisions have on my projected balances before making any decision. It’s comforting to know that I am making the right financial moves today and that’s all the motivation I need!”
If you’re at the point where you’re focusing on a long term financial goal, then you’ve probably made a financial mistake or two in the past. Perhaps you spent several years getting out of credit card debt. Maybe you bought an expensive car that took a long time to pay off. Make that your motivation for keeping your finances on track over the long haul.
For Michael at the Student Loan Sherpa, he thinks about how tough it was to pay off his student loans. “My experiences with student loans taught me the long term consequences of only thinking about the short term. I won’t make the same mistakes when it comes to retirement planning.”
5) Stay Frugal By Reminding Ourselves How Lucky We Are
As your wealth grows, the days of saving up change for Chinese take-out so you can still afford to eat out and pay the rent might feel like a distant memory. Instead, it’s all too easy to adjust to delicious home cooked food bought from fancy grocery stores inside homes we own. You might even think of leaving your current home behind for a newer, nicer home.
But when it comes to making the most of your money to meet your long term financial goals, there’s nothing that will make you appreciate your opportunity more than taking a look at others around the world. That’s one strategy by Sam at the Financial Samurai.
“ I stay motivated by reminding myself how lucky we are to live in the US, where anything is possible. Growing up overseas in developing countries showed me that millions of people aren’t as lucky. We should make the most out of our situation and never take our circumstances for granted.
There can’t be failure due to a lack of effort. For that would dishonor those who never even got the chance.”
Well said, Sam.
What do you do to stay focused on your long term financial goals?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.