How To Set & Prioritize Financial Goals In The New Year

Episode Number: 352

Episode 352: How To Set & Prioritize Financial Goals In The New Year

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How To Set & Prioritize Financial Goals In The New Year

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The time for goal-setting is here, Journeyers! The end of the year is the perfect time to take inventory of your financial goals. In this episode, I dive deep into how to set and prioritize financial goals using concepts from my new book, “Your Journey To Financial Freedom.”

I talk about goal dumping, being flexible with your dreams, and being honest with yourself and what you want out of life.

In this episode you’ll also learn more about:

  • Breaking down the 5 Categories of Financial Goals
  • “Domino Goals” vs. “Gap Goals”
  • How you can break down your goals into actionable steps 
  • What “Goal Fuel” is, prioritizing “The Gap,” the importance of habits and mindsets, the 5 Journeyer Stages of Financial Independence + more
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Jamila Souffrant 0:02

It can be overwhelming if you try to sit down and say, Okay, I need to do all this all these things to reach this one goal. What I'm trying to basically share is how to look at your goals differently. If you need to be more systematic, and more thoughtful about reaching it, because it could be you just have not understood what category your goal fell into, and you have not identified the fuel that would allow you to reach the goal.

Intro 0:29

T-minus 10 seconds. Welcome to the Journey To Launch podcast with your host, Jamila Souffrant. As a money expert who walks her talk, she helps brave Journeyers like you get out of debt, save, invest, and build real wealth. Join her on the journey to launch to financial freedom in 5, 4, 3, 2, 1.

If you want the episode show notes for this episode, go to journey to launch.com or click the description of wherever you're listening to this episode. In the show notes, you'll get the transcribed version of the conversation, the links that we mentioned and so much more. Also, whether you are in OG journey or are brand new to the podcast, I've created a free jumpstart guide to help you on your financial freedom journey. It includes the top episodes, so listen to stages to go through to reach financial freedom, resources and so much more. You can go to journey to launch that comm slash jumpstart to get your guide right now. Okay, let's hop into the episode.

Jamila Souffrant 1:43

Hey, hey, hey journeyers Welcome to the journey to launch podcast. I'm your host and chief launch officer, Jamila souffrant, I am going to be sharing some more solo episodes as we wind down the year. My new book, oh my gosh, I can't believe I'm actually saying this, your journey to financial freedom. A step by step guide to achieving wealth and happiness is practically here. Now I'm not entirely sure when this episode comes out, I am batch recording some solo episodes, because I hopefully can take some time off after the book is released on December 5. But no matter when you listen to this, you can order the book right now you can go to your journey to financial freedom.com to get a copy of the book, whether it's before December 5 that you listen to this or after. And find out all the amazing places to buy it bookshop.org Support your local independent bookstores by ordering through them. Obviously, there's Amazon target Barnes and Nobles, it will be everywhere. Okay, it's literally everywhere, hopefully at least. And you'll be able to walk into a lot of the in person bookstores and pick it up. But I figured that this is a good as time as any to talk about some concepts from the book. So obviously, if you buy the book, you'll get more information and more depth in the things that I'm talking about and can probably follow along a lot easier. But I figured let me give you some tidbits, let me give you some practical advice and ways to help you with your finances just by listening to this episode. So with that, I wanted to talk about goals.

This is a optimal time of year, whether it's the end of the year that you're listening to this or beginning to think about your goals. And people love to start new goals or identify goals at this time of year because the end of the year signifies starting new or ending something and beginning fresh. I know I always get excited about what I'm going to do in the new year. And so we were going to hear especially in the finance space, a lot of talk about setting goals and goal setting and how to crush your new year and all these things which is fine. But I want to talk a bit about your financial goals.

Now in the book, your journey to financial freedom. I talk a lot about goals and balancing your financial goals and your lifestyle goals. Because I find that a lot of people have a hard time and including myself. By the way, I'm not excluding myself when I say a lot of people, because I am just like you, meaning people have a hard time balancing what they're going to focus on in terms of lifestyle goals. So I call those your fun goals the way you want to experience life, how much you want to spend in the now maybe that's daily things you enjoy, like coffee, or going out to eat, or vacationing versus lifestyle choices that you make about where you live and the kind of car you drive. And so these are called lifestyle goals and spending. And then the other goal category is the or are the financial goals. So these are your more responsible goals, typically, you know, tied to things that you feel like you should be doing. And that will be obviously helpful to your life, especially if you're on this financial freedom and independence journey. And because our income really is what allows us to live and achieve our financial goals, and then live the lifestyle we want. A lot of us don't feel like we earn enough or have enough to satisfy the financial long term and short term goals versus what we want to live in the moment what we want to spend in the moment. And then we are then going back and forth with well, then what should I do? Where should I spend my money, and then it comes to okay, if you're listening to this podcast, if you bought the book, you're buying the book, you know, and I'm assuming that you do want to reach your financial goals, because you know, that your financial goals are putting your effort towards that helps you actually live your lifestyle goals. And I want to focus a bit on how you can start to get clarity around your goals. So goal setting, categorizing your goals and what it means for you.

So in this episode, this is what I intend to do. I want to break down your financial goals, what they are, and the five categories that they generally will fall under. Then I want to talk about the difference between your lead slash domino goals, and then your gap goals. I'll explain what that all is. I want to talk about how you can begin to think about your goals breaking them down into actionable steps that you can achieve and work into your day to day life and budget. And then I want to talk about goal fuel the things that allow you to reach your goals.

So first, let's just define financial goals. Your financial goals are specific money goals you want to achieve, related to saving, investing, paying off debt or purchasing something. And your financial goals will generally fall under one of five categories, income spending, saving, investing, and debt payoff. The income and spending goals are your lead goals or your dominant goals. And the saving investing and debt payoff goals are your gap goals. The goals you wish to accomplish with the gap that we talked about, or I've talked about previously in the FYI formula.

So let's break down what each goal is like the definition some examples, and then I'll break down why I call them lead domino goals and why the others are called gap goals. So goal type of income is a financial goal that is tied to how much you make. So let's just say you want to earn 1000 more a month or you want a salary of $100,000. That is an income goal. The spending goal is a goal tied to how much you want to spend, it usually means cutting back in an area. So you want to spend $200 a month on going out to eat instead of $500 a month or something in that area. Now, spending goals can also mean spending more, but for the purposes of this we're going to talk about in the area of cutting back. So those are considered your lead or domino goals, your income and spending goals. Because if you earn more and or spend less, it will generate the money needed to reach the other three goals that I mentioned. So the other three goals that I mentioned, which are called gap goals are your saving goals, your debt, payoff goals, and investing goals, your saving goals or a financial goal tied to saving for something specific. So you want to save 5000 In an emergency fund. You want to save $20,000 in an fu fund. That's that money that allows you to walk away from something or have this runway to do something different with your life. Maybe you want to save for a down payment of a house in four years. So saving for something specific that is a gap goal. debt payoff goal is a financial goal tied to paying off debt. So you want to pay off $5,000 of credit card debt, or $30,000 of credit card debt in five years. That is a debt payoff goal. And an investing goal is a financial goal tied to investing. So you want to invest $500 A month or $200 a month or have accumulated maybe $100,000. In your retirement accounts in 10 years, those are investing goals. So saving debt payoff and investing goals I consider the gap goals. The gap comes from the concept in my FYI formula that I've talked about on this podcast and in previous episodes.

Again, all of this is also laid out very clearly in the book. And so essentially the FIA Formula and its components allows you to organize and think about the way your money or income is flowing in your life. And essentially you need your income minus your money. Three expenses equals what I call the gap. It's a pool of money, hopefully, that you can generate that allows you to pay for your discretionary expenses. And then your goals. So your your saving and debt payoff goals and investing goals. And so I call them gap goals, because you can accomplish your saving debt payoff and investing goals by accomplishing your income and spending goals. So the mistake that I see people make is they'll identify that they want to save X amount of money, or pay off this amount of money or invest. But they have not figured out that in order to do that, you need to work on a domino goal, you need to work on increasing your income, and or decreasing your spending in a certain area. And you may have found yourself not being able to reach you're saving that payoff and investing goals, because you have not focused on any of your income or spending goals. And so achieving the gap goals almost are impossible, because the money has to come from somewhere. Unless you you know, come into money or and you know, win the lottery? Or do you find money literally, you have to either earn more, or spend less in order to reach any of these gap goals saving debt payoff and investing goals, which also leads into your goal fuel. Another concept that I talked about in the book, your journey to financial freedom. So your goal fuel is basically what is going to allow you to accomplish the goals you've set for yourself. So it's the fuel that keeps the rocket going. And the goal fuel two of them we already talked about, it's really Domino's, it's your income and expenses. So your income goal fuel, if you think about it is how can you increase your income to achieve this goal? Or how can you cut back or eliminate an expense to reach this goal. And then the other two that haven't mentioned in this particular episode, yet are very, very important. But they are your mindset goal field and your habit goal field. So your mindset goal fuel is how can you improve your mindset around this goal? Your habit goal field would be how can you alter your habit or improve your habit to help you achieve this goal. So if you're thinking about a goal that you have for yourself, and it can be any of the five major goals I just talked about, what is going to be the fuel that allows you to accomplish that goal. So I want to take a gap goal because it's easier to actually do the capital. But let's just say you have a goal of paying off $5,000 of credit card debt in three years. How are you going to achieve that goal? Let's identify the goal fuel, or the fuel needed to make you accomplish that. And so if you're looking at it, and going down the list, you'd say, okay, mindset, what am I going to work on in my mindset or on my mind set that's going to help me accomplish this goal of paying off debt? Now it could be I need to view my and look at my past decisions, not as mistakes. But as lessons. I need to give myself more grace, and to forgive myself for past financial decisions and behaviors that allowed me to accumulate the debt.

Maybe you need to forgive others that maybe put you in a position to accumulate the debt. But what is it about your mindset around this goal that you can improve upon that helps you achieve it? That's that fuel? How can you identify what that is? All right, what is your habit goal feel that you're going to use accomplish this goal. So you may feel like okay, a habit that I have that's not helpful, is that I tend to when I go into the store or target or wherever you sometimes shop, you buy unnecessary things. And so what is the habit? Because if you're trying to pay off debt, the goal is to not accumulate more debt on top of that credit card debt, right? Unless it's for an emergency and you have no other way. But then how would you create habits that help you pay off that debt without accumulating more. So if you find that you tend to overspend or use your credit card, when you don't need to? Maybe that habit change is not bringing your credit card into the store and bringing only cash for the things you need. So what is the habit goal feel that you need to do to accomplish that goal. And then you have your income goal fuel. So how can you increase your income? Maybe you need to negotiate at your job for a higher salary, or pick up a side hustle to bring in additional income. And then last for a goal fuel is what expense goal fuel do you need to think about to meet reach that goal? So maybe you need to cancel cable or do something else so that you have money to put towards that credit card? I do want to say that it is important to note that you may not need to work on our figure out or identify all the goal fuel for one One goal, right, it might be just enough to pay off the credit card debt that you've set as your goal that you need to do a side hustle and take that money and put it towards that goal. I will say that your mindset and habits, even if you're not conscious about it will impact how you reach that goal. So you might as well identify if there is a mindset or habit, something lacking in that area that's keeping you from reaching that goal. But it can be overwhelming if you try to sit down and say, Okay, I need to do all this, all these things to reach this one goal. What I'm trying to basically share is how to look at your goals differently. If you need to be more systematic, and more thoughtful about reaching it, because it could be you just have not understood what category your goal fell into. And you have not identified the fuel that would allow you to reach the goal. All right. So I do want to also let you know or give you some tips on how you understand your goals. Because if you're like me, especially depending on your journey, or stage, and then the things you want for your life, you might have a lot of goals or had a lot of goals. My goals are simple. Now, I don't have as many as I had when I first started my journey. But what you want to do is get it all out of your head, you need to write them down. And so do a gold dumb. You know, in this episode, I believe I'm just gonna focus more on financial goals, because in the book, I talk about the breakdown between financial and lifestyle goals. But for this purposes of this episode, think about your financial goals, the categories that I mentioned, all five of them. I mean, you may not even know yet what categories they are, but you need to write down all your goals and then assign a category to it. So you understand clearly what you'll need to do to reach it. But essentially get all the goals out of your head, out of your mind out of your heart. Put them all down your financial goals, right? I call it a goal dump. And you're going to want to write them all up. The ways in which you're not going to organize your goals are going to be by timeframe. So what are the short term goals you feel like or immediate goals you want to accomplish in one year or less? What are your mid term goals? So goals you want to accomplish in one to five years? And what are your long term goals goals that will take you a little bit longer to accomplish? Right. So you're thinking about the timeframe from what the knowledge, you know now, how long it will take you to reach those goals. Now remember, once we really get into the numbers, I say this in the book is that we have an idea of of how long we want things to take. We can be very ambitious about that, I would say be as ambitious, and audacious as you want. But as you start to work the numbers, you might be humbled a bit and put back more into reality on how long things actually take and that is fine. First, just from your best knowledge right now. What are the timeframes in which you want to reach all the goals you just set for yourself, then you need to figure out, this is going to be important, how you are going to prioritize those goals. So what's important, I know we want to do all the things and do all the things right away. But it's impossible, unless you have a lot of money. And even if you have a lot of money, even even the millionaires or people rich, famous people we see will complain that they don't have enough money to reach all the goals they have. And so it's not always a matter of having all the money but in just general because some goals also take energy and time of your own time. And so you can't possibly do it. All right. And so think about the importance or prioritization of the goals you want. So you did your goal dump you identify what type of goal it is. And now you want to figure out what's more important. And not only did you figure out the tight, but you figured out the timeframe in which you want to accomplish those goals. And so if you have them in buckets that okay, here are my immediate goals that I believe I want to I can do and I want to do in a year. Here are my midterm goals. And here are my long term goals. Now look at what is the most important goal for me in the immediate bucket? What are the most important goals in my mid term bucket? And what are the long term bucket goals that I can accomplish? And what is the prioritization of them? What is one, two and three. The other thing you're gonna want to do with your goals is calculate how much each goal is going to cost you. And it can be on an annual basis or monthly basis most likely monthly, if you are working this into your budget, which you should be. And so thinking about, okay, if I do have $3,000 of debt, how much more can I put towards my credit card payment? And what does that look like in my budget? And then as you work through this process, you'll be able to see, okay, I've just selected In my top three goals, financial goals are four goals that are immediate midterm and long term. And it cost me this much to do these goals on a monthly basis. This is where a budget comes in, because you can work into how can I include these in my budget? Meaning how can I make sure that they're getting accomplished that I'm putting the $200 towards my savings account? And that there's enough money to do that. And then that's where we go back to the lead, and Domino goals? Well, if there's not enough money to work in these goals that you set for yourself, what do you need to change in your income? And what do you need to change in your expenses? Very key, and of course, mindset and habits. What mindset shifts do you need to create to, to allow you to know that you can earn more, to give you the confidence to go and ask for more, or what habits shift do you do, you need to make to understand that you need to cut back in certain areas of your spending, because you literally cannot afford to do this all unless you want to stay stuck in your space that you're in. So really important to think about. And by the way, I actually made a toolkit. So if you get the book, you have the book, and you go to your journey to financial freedom.com. There is a toolkit that will come with the book, a digital one that has a worksheet on goal setting, and a lot of the things that I just talked about, that'll be very helpful to you. So another reason you should buy the book. So you can get this toolkit and there are a bunch of other little very important and helpful worksheets within the toolkit that you can get. But go to your journey to financial freedom.com To get your toolkit and you'll see the link to get the toolkit after you purchase the book. The other thing I do want to mention maybe a couple other things I want to mention about when you're thinking about your goals, is that you need to understand that your mind can change as you begin this journey your mind can change and it honestly it will change as you begin your journey because what you want maybe had as a goal financial goal of saving X amount in your fu fund or wanting to invest this amount. You may travel on your journey and realize that you need to be more aggressive with that goal because you don't want it to take as long as you just calculated that it will take you to reach the goal. Or you may figure out that you know what, I don't have it in me to do what it takes to earn more, or spend less to reach this goal that I've set for myself and you're being honest with yourself about it. And when you're honest with yourself about that, then you can change how long the goal takes you. But also take accountability for the length of time it takes you and there's no shame in adjusting your goals based on your lifestyle based on what you want to live the quality of life that you want. But understanding that it's okay to change your mind. I've changed my mind multiple times about my own financial goals and lifestyle goals. So that I can be more realistic because life is lifing. And we often feel like money and getting to our financial goals will solve our problems all of our problems and they don't it doesn't in the earlier journeyer stages. So I have five Junior stages. I've talked about this in the podcast and definitely in the book that you need to travel through to reach financial independence. The earlier stages are the Explorer stage and Cadet stage the stages in which you're getting to financial stability and paying off debt. The later stages are the aviator stages, the commander stage and Captain stage so aviator is about being able to achieve financial security. The commander stage about achieving work flexibility, the captain staged about complete financial independence when you are in the earlier stages of your journey, so the Explore and Cadet stages, you will need to put more of your effort and energy into getting to your financial goals. Now you still have lifestyle goals wants and needs meaning you want to spend on discretionary items and you still want to be able to do the things you love in these stages. Right so I am in no way suggesting that if you are an explorer or cadets are in the earlier stages, that you only focus on your financial goals. Again, that is not my mindset when it comes to this journey. But the reality is you want to be especially that first explorer stage you want to be able to get out of it as fast as possible. Because that explore stage if you're listening. You are drowning in your expenses and or debt payments and can't survive. Now. I always have to make just a aside that this is not for people who do not earn enough and are barely making it enough to live and have the basic necessities. This is not a message for you. Because it's, it's deeper, it's harder than just spending less your most likely are spending in a way that is best suited so you can live the life you you need and deserve right, this is more for people who really need to reel it in and figure out how to get out of this stage. And it's not because they don't earn enough, they just need to figure out how to organize, be more disciplined with their expenses. This may require that you hold off on your lifestyle goals, or at least not put as much money into them. Because you're focusing on getting out of the earlier stages faster. Once you get out of that explore stage, that first stage in your into your debt payoff stage, you can decide how long it takes you to pay off debt. I know for me, when I realized I was in a situation that I did not want to stay in long, I made it a priority to focus on my financial goals over my lifestyle goals. So most of my money went to or any additional money in that gap in our family went to our financial goals, because I needed to get out of my commute, I needed to leave my job earlier than the standard age. And it was by any means necessary. Now that I'm in a later stage, so I'm in the work, flexible stage where the commander stage, my ability to switch between how much I put to financial goals versus lifestyle goals is a bit different, I can be a little bit more flexible. So again, this is going to be an exercise in terms of setting goals and how long you want it to take. It's really going to be a decision that you make based on your circumstances and your willingness to be uncomfortable. Your willingness to delay gratification sometimes. And understanding that it's okay if you don't go fast within the stages because you don't want to or you can't at the moment. But that understanding your choices and whatever choice you make, you're taking back the power of I don't have a choice. I'm just kind of you know, life is just life in me and I don't have a choice in what's going on. And so when you're able to sit down, take a look at the goals you've set for yourself and take accountability and responsibility for what you can do to help you reach those goals. You can opt out and say hey, you know, I'm not willing to do that. I'm not willing to get a side hustle. I'm not willing to maybe cut back on this area of life that I enjoy. Okay, then how does that affect your financial goals? All right. I hope that this episode was helpful to you as you are thinking about the financial goals you are setting for yourself. I hope it gives you more clarity and helps you figure out how you can actually achieve those goals.

You can go to your journey to financial freedom that is the book website to get your toolkit so that breaks down and gives you the goal worksheet. If you get the toolkit and helps you figure out where to buy the book, the book should be out if you're listening to this, you can order it right now by going to your journey to financial freedom.com. And I hope you enjoyed it.

Outro 28:08

Don't forget you can get the episode show notes for this episode by going to journey to launch.com. Or click the description of wherever you're listening to this. And you can still grab your jumpstart guide for free to help you on your journey to financial freedom by going to journey to launch.com/jumpstart. If you want to support me and the podcast and love the free content and information that you get here, here are four ways that you can support me in the show. One, make sure you're subscribed to the podcast wherever you listen, whether that's Apple podcasts, that purple app on your phone, your Android device, YouTube, Spotify, wherever it is that you happen to listen, just subscribe so you are not missing an episode. And if you're happening to listen to this and Apple podcasts, rate review and subscribe there. I appreciate and read every single review number to follow me on my social media accounts. I'm at journey to launch on Facebook, Instagram and Twitter. And I love love love interacting with journeys. They're three support and check out the sponsors of this show. If you hear something that interests you, sponsors are the main ways we keep the podcast lights on here. So show them some love for supporting your girl for and last but not least, share this episode this podcast with a friend or family member or co worker so that we can spread the message of Journey to launch. Alright, that's it until next week, keep on journeying journeyers

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