Too many people have great intentions, but fail to meet their goals. It’s not because they want to hurt their finances, it’s because they lack a system that will help them achieve their dreams.

I’m going to share how you can create a financial game plan for next year and how you can actually follow through on it. The best part is once you have your system set up it’s just a matter of using 15 minutes a month to check your progress. Interested? Let’s get started.

Define Your Big Goal

Saving up for our next car

What’s your #1 goal for next year? Maybe it’s paying down or off some debt. Perhaps it’s building up your savings or paying for a vacation before taking it. Whatever it is, pick a goal that’s important to you.

For this exercise I’ll use one of our own goals for 2012- getting a family car. Our current vehicle is small and crowded for our family. Before the baby it was alright; four people could fit and we still had some trunk space. Now we have baby gear and we tend to carpool with friends to events. In addition, the car is 12 years old and repairs are starting to increase.

However we want to avoid having a car payment with the family car. We keep our living expenses based on one of our incomes while we pay down the student loan and mortgage with the other. We purchased a car last year for my husband so we have a system that has worked; we just had to tweak it to fit our new goal for the family vehicle.

Break Goal Down Into Bits

Now that you’ve defined your goal, it’s time to break it down into bits, the smaller the better. Continuing our example, we’re not going to throw our money at the first car that fits our needs. This will be a big purchase, so we want to get the best value out of it.

Here’s the list that I’ve made on what to do:

• Build up our care replacement fund.
• Whittle down what car we’re looking for.
• Spread the word about the car hunt.
• Shop around locally to find the best deal.
• Get a 2nd opinion (from a mechanic).
• Purchase the car.

Looks a bit long, but I wanted to break it into manageable pieces. Can I get this task get started or done in a day? If so, then it’s small enough. If not, I try to break it down further.

Set a Deadline for Your Goal Bits

Now that you have an idea of what you need to do, it’s time to out your checklist into your calender. My recommendation is look at a goal or two a month. Don’t feel like you have to do everything at once.

Here’s how I broke down the plan:

• Build up our car replacement fund. We did a great job in 2011 with automating our payments into a dedicated savings account. I’ll review and adjust a monthly contribution the first week in January to build it up further. Deadline: January 31, 2012
• Whittle down what car we’re looking for. The two of us need to sit down and figure out a handful of makes and models that fit our criteria for a family car. We need to have something that’s mechanically reliable, has a good safety record, and gets the same or better gas mileage than the car we have now. Deadline: February 15, 2012
• Spread the word about the car hunt. I think is the easiest – we’ll tell all of our friends to keep an eye out for us and give them a price range. Deadline: February 29, 2012
• Shop around locally to find the best deal. We’ll be visiting private sellers and dealerships to see what around. We’ll probably pick a day out of the week to set aside for actively looking around. Deadline: March 31, 2012.
• Get a 2nd opinion (from a mechanic). With spending a good amount of money for this car and to find something that will last a bit we’ll pay to have a mechanic give us a second opinion. This step will be for cars we’d like to purchase. Deadline: December 31, 2012
• Purchase the car. Sign the check drive the car!  Deadline: December 31, 2012

It’s going to be a fun ride this year, but baring any huge emergency/event we should reach our goal.

Psychology of Money

What goals do you have for next year? How will you accomplish it? Curious to see what affects your money making (or losing) decisions? Check other posts in the Money & Psychology series:

• Choosing Friends to Build Your Net Worth
• Decisions, Decisions – Making a Big Purchase
• Is Saving Really About Motivation?
• Ways We Spend Money Without Evening Knowing It (and How to Fix It)
• Barriers That Prevent us From Saving Money
• Dealing with the Stress of Financial Issues
• Getting Your Finances Ready for a New Job
• Are You Hurting Your Own Finances?

Photo Credit: Ha-Wee

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Why Your Friends Can’t Save Money

Have you ever heard any of your friends complain that they just can’t seem to save money? Have you ever tried to save yourself and wound up failing? Is saving really about motivation or is there a secret that can you reach your financial goals?

Believe it or not, many people fail due to two things - external and internal influences. External influences include losing a job, getting unexpectedly sick or injured, or having your car totaled. Internal influences are the psychologically barriers we’ve placed on ourselves.

While people often blame external influences on why they have no money saved up, there are many cases where it’s actually an internal barrier that can hold us up.

Becoming Friends with Money

Being properly motivated to reach your financial goals often means have a realistic relationship with money. What feelings do you associate with money? Do you think about security and control or do you worry about how it would affect you?

Don’t make the same money mistakes others have. Become empowered to become richer and make more money.

Use Psychology to Become Rich

You don’t have to be super motivated and self-disciplined to build your net worth. In fact you don’t have to dedicate a huge amount of time to make better money decisions. What you need is to make our psychological barriers work for us rather than against us.

Here’s one example – having a debt free vacation. What usually happens is that we say we want to save for our vacation, but instead we end up putting the trip on our credit card and slowly pay off the debt until the next vacation comes around and we repeat the cycle.

Here’s what you can do in 5 minutes. Go to your banks’s billpay portion for your accounts. Set up an automatic transfer of x amount of money (10% of what you last trip cost you if you want a number) to either your savings account at the same bank or better yet to a savings account at another bank/credit union. The key is to make it automatic and make it a bit harder to get to your money.

Alan Corey used this technique with his paychecks and saved money to fuel his real estate deals and become a millionaire before he was 30.

It’s not hard at all, but it works.

Psychology of Money

Curious to see what affects your money making (or losing) decisions? Check other posts in the series:

• Choosing Friends to Build Your Net Worth
• Decisions, Decisions – Making a Big Purchase

What have been some hurdles for you when it comes to saving money? What helped you to succeed where you had failed before? How long did it take for you to reach your savings goal?

Photo Credit: shortformvideo

It’s January 3 and that means that we are officially into 2011.  I would like to take this opportunity to wish everyone the best of love, life, and luck, in 2011.  I know that it is cliché to write about our resolutions and goals at this time of the year, but I would like to do it anyways.  After all, my personal motto is…Why be different, when I can just be me.

Instead of making New Year’s Resolutions this year, I propose that we all make Financial Resolutions.  New Year’s resolutions are usually so broad and general, that we may probably don’t achieve them.  Then, we are left setting the exact same New Year’s Resolution the next year.

A resolution is always easier to achieve when we have a clear defined goal with a direct path to follow. Let’s throw out our general New Year’s resolutions, and all set at least one specific Financial Resolution for 2011. 

It is great to say that we would like to earn more money in 2011, but that is a general goal.  Ask yourself, how will I earn more money? What will I change in my life? We need to think about how we are going to find a solution, or a resolution, to our goal.  As an example our goal could be to earn more income, and our resolution could be to go back to school and study marketing, or economics, or finance.  When we set a goal, we also need to make a plan to achieve our goal After all, the solution is a part of our resolution.

A Financial Resolution could be as simple as saving 2% of your pay check every week. Or, it could be a more complex resolution, such as starting your own business. 

What are your Financial Resolutions for 2011?

Here are my Financial Resolutions for 2011:

Goal: To pay off my credit card balance in full by August 31 without using my savings and without increasing my monthly expenses.

Resolution: I will set up a pre authorized payment from my bank account to my credit card on a biweekly basis.  I will not use my credit card for the next 8 months until it is paid off in full by August 31.  I don’t want to stop saving, and I don’t want to save less in order to pay off my credit card.  I want my monthly expenses and savings to remain the same. To achieve this I will cut back some personal expenses such as eating out and buying clothes that I don’t need.  I will allocate the extra money to my debt repayment.

Goal: To take a one week vacation to Portugal the last week in September.

Resolution: I will open a vacation savings account, and set up an automatic transfer on a biweekly basis to start saving money and keep it separate from my other savings.  The first step will be to renew my passport. I will then have to research the cost of a trip to Portugal.   If I know how much the trip will cost, then I will know how much I need to save on a biweekly basis. I know that the cost of living in Portugal is significantly lower than in other Western European countries such as Italy. This means that I will be able to stretch out my money, even with the Euro exchange versus the US Dollar. 

Photo By Ben Sutherland