You’ve prepared a net worth statement, thought about what you want to achieve in life, identified some goals, and broken them down into short- and long-term goals. Now you need to determine how you’ll evaluate your progress.
You may have a sense of whether you’re making progress on your goals from month to month, but take the time to sit down regularly (monthly, quarterly, whatever makes the most sense for your situation) and review how you’re doing. Long-term goals can be reviewed less frequently than short-term goals because your time frame for achieving them is longer, but more frequent reviews allow you to spot problems earlier and take corrective action if you’re falling short of where you want to be.
You should recalculate your net worth at least annually, but more frequently is even better. For most people, it only takes a few minutes to update the information once you’ve generated your first statement. Go over your updated net worth statement, and if you’re part of a couple, talk with your spouse or significant other about how much you’ve accomplished and where you’ve fallen short. If you’re single, you’ll do this on your own, unless you want to involve someone else like a close friend or financial mentor. If you’re not making satisfactory progress on a particular goal, reevaluate your approach and think about what would help you get on track. If you’re making steady progress, seeing it in black and white can be motivating and rewarding. Give yourself credit for what you’ve achieved so far.
From time to time you may find that your goals have changed, and that’s okay. A good financial plan is flexible and changes with your needs. If you lose interest in a goal, don’t consider it a failure. There’s no reward in working for something you don’t really want. Make the necessary changes in your goals and move on.
It can be a tremendous help to engage the assistance of others. Talk to people who have achieved a goal similar to one you’re working on. You can gain from their experience and insight, and seeing their success can help keep you motivated.
If you find yourself falling short of your goals because you don’t feel motivated enough to stick with your plan, make a list of everything you’ll gain once you’ve succeeded in achieving your goal, and remind yourself often. Don’t underestimate the power of your subconscious to help you stay motivated. Put positive thoughts in your mind about your goals, and they’ll be easier to attain.
Unfortunately, people don’t always learn the basics of personal finance from their parents, and the current education system doesn’t adequately teach them either. In fact, the Jump$tart Coalition for Personal Financial Literacy, whose mission is to improve the financial literacy of young adults, says that the average high school graduate lacks fundamental money management skills and a basic understanding of earning, spending, and saving money. It’s no wonder that most people make financial mistakes in their twenties and thirties that they pay for over the next decade or longer. You can avoid these mistakes by educating yourself about basic money matters and practicing good money management.
Where do you start? Books like this are one source of reliable information. Check your local bookstore or surf an online bookstore such as Amazon, searching for keywords like “personal finance” or “money management.” Financial magazines, such as SmartMoney, Barron’s, Money, and Kiplinger’s Personal Finance, are another great source. Some of them are geared toward avid investors or those interested in business financial news, so try several different ones to see if any of them are relatable. If you find one you connect with, consider subscribing to it.
The Internet is a source of nearly limitless information. Try to stick with well-known sites such as NerdWallet, Kiplinger, and Investopedia rather than the “this is how I did it” personal sites. Although the latter can have useful information, these sites can steer you in the wrong direction with some questionable advice or information. On the other hand, the personal sites about frugal living, downsizing, and cutting costs can be great for giving you ideas on how to do the same.