Ready. Set. Goal! A 4-Week Financial Fitness Challenge

Did you know that the main reason why most people don't achieve their goals is lack of proper planning? We invite you to commit to Ready. Set. Goal! A 4-Week Financial Fitness Challenge

Week 1 Challenge: Set Your Goals.

Daydreaming about your goals can be exciting. It can also be daunting if you aren't sure how you'll achieve them. That's where planning comes in. Most financial worries stem from lack of planning, not money. It's easy to understand the importance of financial planning when you think of bigger goals, like buying a new car. But it's also important to recognize that nearly every life goal requires some financing. For example, what if your goal is running your first 5K? Even that can add up—new sneakers, a training program, entry fees for a race, can easily cost you a couple hundred dollars. Here are a few steps to get you started.

  1. Write down your goals. Include every goal you can think of; every practicality, creature comfort and fantasy you can imagine. Need some inspiration? Check out YOU Save. Note: Be specific. For example, instead of listing "travel," write down where you want to go. Giving your goals a clear picture will make them easier to plan for, and ultimately help you feel motivated to achieve.
  2. Divide your goals into three lists.
    • Immediate (within 3 years): Such as buying a car, beginning a hobby, or saving $1,000.
    • Intermediate (in the next 3-7 years): Such as having a child, taking a vacation or getting married.
    • Long-term (in 7+ years): Such as saving for your child's college education, retirement or supporting aging parents.
  3. Prioritize your goals. For this challenge, focus on your #1 goal in each category. Tackling all your goals at once may feel overwhelming, and may be unrealistic. Selecting and achieving one goal can keep you motivated and focused on achieving the others.
  4. Research and reflect. Start to think more specifically about what you want, what's available and what you think you can afford. For example, if your goal is to buy a car, think about what type you want, what type you need, do you want to buy new or used, etc. Where possible, identify and price out all associated costs with your goal so that you can accurately plan and save.

For more tips on goal setting, check out chapter 1 of Save Wisely, Spend Happily—for even more great tips and information, check out the full book  available on Amazon.

Next week we'll start looking more closely at how you save and spend in order to help you figure out how to finance—and achieve—your goals.

Make sure to share your challenge progress and insights with us on Facebook and Twitter!

Week 2 Challenge: Track Your Spending and Saving

Now that you identified your goals, the next step towards achieving them is to track your spending and saving. Tracking may feel time-consuming, but when you take the time to do it, you gain a much clearer understanding of what you need to do to finance and achieve your goals. The following steps will help guide you through this next part of the challenge:

  • Record all your spending this week. Even if it seems minor—like buying a pack of gum, or putting change in a parking meter—write down every item you buy and how much it cost.
  • Categorize your list. Organize what you spend into two groups: essential, for basic, unavoidable living costs, like food and shelter, and discretionary, or any other spending.
  • Cross off any items you can do without. You may be surprised at opportunities you didn't notice before that will help you save money and achieve your goals.
  • Calculate how much you need to save per day to reach your goal. For example: You want to start exercising more. To support that goal, you want a new bike. The one you want costs $500. You decide to shave off $2 a day in discretionary spending to save for the bike. $500 total/$2 day = 250 days (roughly eight months) to reach your $500 goal.
  • Adjust the amount you save to reach your goal faster.For instance, if you don't want to wait eight months to get the bike mentioned above, bump up your per-day savings.
    • Save $3/day, and it will take you roughly six months.
    • Save $5/day and you are down to about 3 ½ months.
    • Able to save $10 a day? You'll only have to wait about six weeks!

For this challenge, we're only asking you to track for one week, but to get a clearer picture of your spending and saving habits, try tracking for a whole month! There are more tools and tips for tackling your budget available here on feedthepig.org.

Week 3 Challenge: Review Your Budget

Week 3 Challenge: Review Your Budget. Last week, tracking your spending and saving gave you a better understanding of where your money is currently going. Now it's time to plan out where it should be going. Reviewing your budget will not only give you a map of how you should save and spend, it will also help you find ways to make adjustments in order to achieve your goals, and ultimately keep your finances on track. Here are some tips to get you started.

  • Set up a budget if you don't already have one. Not sure where to start? Check out our Budget Template and Budgeting Overview.
  • Review and re-evaluate your budget. Take a look at the lines on your budget compared to what you actually spent last week. Is there more coming in than going out? If so, you will need to make adjustments. Are you including saving for your goals as part of your budget? Many people think of budgeting as spending focused, but it is also an important way to make sure you're saving.  
  • Adjust your budget. While your spending and saving habits should match your budget, it may be that your current budget does not suit your needs or situation. Over time, circumstances change, but your spending habits or budget may not. Ask yourself if you need to make adjustments to match your current reality. 
  • Use your budget to your advantage. Depending on where you are now, you might find that you need to adjust your budget more in order to reach your goals. Even the smallest of changes can save you a few dollars a day that you can apply towards your goals. 
  • Remind yourself of your goals. Were some adjustments to your spending hard to make? If so, try writing your goals from week 1 on your budget, or in other places that you will see often, to help motivate yourself to stick to it. It can also help to ease your way into the change gradually. For example, if you're trying to stop buying lunch every day, try cutting back by one day a week instead of going cold turkey.

If you don't take the time to plan and budget, chances are it will be difficult to reach your goals.

Week 4: Create Your Financial Game Plan

Your financial game plan should take into account all the insights you gained throughout the first three weeks of the challenge—your goals, your spending and saving habits, etc.—in other words, it should help you see the "big picture." The following basic steps will help guide you through the final week of the challenge and beyond.

  1. Map out all your goals over at least the next 5 years. During the challenge, we recommended that you focus on one particular goal. Now that you're familiar with the goal-setting process, apply your learnings to your other goals, and map them out over the next 5 years.
  2. Set milestones for yourself. Setting milestones can help you stay motivated and make sure you stay on track. For instance, if your goal is to save for a hiking vacation in the Rocky Mountains, you could make your first milestone a new pair of hiking boots, or saving $500 in the first five months.
  3. Create a solid financial plan. There's more to your finances than day to day activities. Consider every factor in your financial world, including insurance, retirement plans, investments and asset allocation, debt and repayment, etc. Your tax return can be a big help in identifying and analyzing where you were in the last year to help you plan for the year ahead. Your local CPA can help you fully understand and best utilize your return.
  4. Keep building your financial knowledge. In addition to Feed the Pig, there are many excellent books and websites devoted to money-related topics, such as Save Wisely, Spend Happily. The more you learn, the greater your chance of reaching your goals.
  5. Keep reviewing your budget and goals. Budgets and goals can change—for instance, you may get a new job that pays more or less, or have a new goal you want to achieve. Make sure the budget and plans you've set up align with your current realities.

How's the challenge going for you so far? Share your progress with us on Facebook and Twitter!