Why You Don't Have To Cut Back On Lattes To Save $

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money_goals_slide1Illustrated by Anna Sudit.
UPDATE: This post was originally published on May 11.

It’s Personal
Would you believe that amassing as much wealth as possible over a lifetime might not be everyone’s goal? Why not? Because personal finance, as its name suggests, is very personal. Money means something different to each of us, and we all have unique goals and aspirations we hope to someday achieve — with the help of money. Money is just that: a tool for us to get and do what we truly want in life.

One of the biggest reasons we often don’t achieve or make progress on our money goals is that they’re not our own. How many times have you read an article or book telling you what you should be doing, whether it’s saving 10% of your income, or spending less on clothes and lattes? How many times were you initially motivated to do it but then weren’t able to follow through? Here’s how you can create personal finance goals you’ll be able to stick to — because they’re distinctly yours.

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Start With You
Your core values should serve as your financial roadmap. If you aren’t in tune with what matters most to you, you might be aiming to accomplish things that aren’t important to you — and that can lead to anxiety, distress and, ultimately, failure in reaching your goals.

To identify where your values lie, think about what interests you — activities you love to do, things that are most important to you. Use these ideas as motivations to create and achieve meaningful money goals. For example, if you value adventure, you might prioritize saving for a yearly trip to somewhere you haven’t been, as well as saving for retirement, so you can continue making those trips long after you’ve stopped working.

If you value charity, you might prioritize paying off your credit cards so you can dedicate the equivalent of your monthly payment to an organization you’re passionate about once you’re out of debt. Don’t want to scale back on a few flights home per year to visit family? Then don’t. Cut back someplace else instead. Your financial goals might look similar to your friends’, but the why behind them can be very different.

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Get Specific
It’s important to clearly define your goals — both in amount and time frame. We are much more likely to succeed if we know what we want and by when. Whether it’s saving for a down payment on a house, getting out of debt, or hitting a certain target for retirement, ask yourself: How much do you need to save in order to accomplish your goal? When would you like to get there? Next year, in five years or even in 30 years?

This is a hugely important starting point — but no goal is set in stone. If you realize along the way you need to save more than you think, simply adjust. If you recognize it will take longer than expected, reset your timeline (and expectations).

Map Out How You’ll Get There
What are the steps you need to take to get to your goal? Rather than thinking, “I need to save $50,000 to pay down my student loans,” which can seem daunting, break large goals into small steps. How much do you have to put toward your student loans each month or even each week to pay them off in five years? Then determine where that will money come from. You might choose to reallocate money from your savings, cut back spending in areas you realize aren’t important to you, or increase your income by negotiating a raise or finding a secondary income source.

Make It Easy
Make achieving your savings goals as easy as possible for you. This could mean setting up an automatic transfer for a specific amount from each paycheck into your saving or investing accounts, or setting up email or phone alerts that remind you to move money each week. You might find it helpful to share your goals with a friend or accountability buddy to help you through any setbacks. Choose the methods that work best for you, but make sure to prioritize your goals first. Don’t wait to see what’s leftover to save.

Celebrate Your Success
Most importantly, track and celebrate your successes. Achieving your financial goals, thus allowing you to live your most meaningful life, is no small feat. Treat it that way. Make a chart where you cross off pieces of your debt as you pay it off or celebrate saving for retirement with friends by throwing a financial freedom party. There are endless creative (and inexpensive!) ways to reward your progress that will, in turn, motivate you to keep moving toward the achievement of your other goals.

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