I am frequently asked about the importance of setting goals when you are trying to get your finances in order.

I have been to many classes on goal setting through the years. The most influential classes I have attended have been about goal GETTING as opposed to goal setting. While it is important to dream about or visualize your goals, it is even more important to plan how you are going to get there! The old adage goes that a journey of a thousand miles begins with one step. We can apply that to finances via the phrase “you can’t get to retirement if you don’t start putting away money TODAY.”

An important part of good financial management begins with organization. If you do not know what you have (or what you owe), how can you begin to manage it? For example, I have a client who came into some money and asked me which of their credit cards to pay down. Should it be the largest balance card, or should they wipe out a few of the smaller cards. The correct answer was whichever card was charging the highest interest rate! It did not matter what the balance was, if the interest rate was low.

Once you figure out where you are (and that can be daunting), figure out where you are going. Determine spending habits, and more specifically WANTS versus NEEDS. Make sure the needs are taken care of, and then determine if the WANTS are worth the price you are paying for them. For example, I had a client who gave up their cable at a monthly cost of $60 because the programs she was watching just were not worth the cost. Instead, she committed to a healthier lifestyle, getting out and walking, riding a bike, or just sitting in the park. You would be surprised how entertaining people watching in a public place can be!

Once you have your financial goals down on paper, in a specific format, with measurable results, it is time to act on those goals. Put away what you have committed to, and stick to your guns. Use the common phrase “pay yourself first,” since the bills will always be there.

Determining where you are, what the plan is to get you where you want to be, and ACTING on those plans, are the three steps to ultimately getting what you want. And if you’re weak from time to time, see a Reno CPA for support!

Reno’s Best CPA,

Tim Nelson