In roughly a weeks’ time, I’m heading off to Europe for a month. I’ve written my list, pre-packed my bags, my passport is ready and most importantly…I have cash to spend!

I have known this trip was coming up for a while, so about a year ago, I started to plan ahead. It was simple process, I just worked out how much spending money I thought I’d need, divided it by the number of pay cycles between then and now, and then set up a direct debit to put the money aside from each pay. I set myself a financial goal and I achieved it, and it took me less than five minutes to set up.

The set up process itself is the easy part, sticking to your plan is where many of us tend to come unstuck.

So, what did I learn along the way?

Start Small

I have previously made the mistake of diving in at the deep end with an expensive goal which had a long timeframe – this was disastrous as I went off track. I quickly learnt, that rather than starting with a goal of $10,000 over a two-year period, it’s easier to start with something like $500 over a 3-month period. I have been much more successful when I have done it this way.

Be Realistic

I remember once setting myself the goal to pay off my home loan in 5 years. It was a great idea, but I made the mistake of setting myself an unrealistic goal. I had to cut so many corners in my budget it was just never going to be feasible. At least not in 5 years with 3 growing children.

It’s very tempting to look at the timeframe you have (assuming you’re on a deadline), then the amount you need and set yourself and unrealistic goal just as I did.

Stick to the plan

Next (and probably most importantly) I failed to set up a failsafe system to put the money aside so I didn’t spend it. I was putting the money onto my loan but we had a drawdown facility so each time we didn’t have enough money (because I made the budget too tight) we would just draw funds back, It was always 3 steps forward and 2 steps back. I should have had a set up that didn’t allow me to access my funds so easily as it was just too tempting. My mother-in-law for example, puts all her $2 coins into a coke can, which holds around $500. She then uses this as her Christmas spending money and can’t access the money without cutting open the can. These days when I set goals, I like to set up a direct debit to a sub account which isn’t linked to a debit card so that I’m not easily able to dip into my funds.

Reap the benefits

Financial goals are a great way to help us to feel we are having success financially. I have also found it has helped me to change the way I view my relationship with money – instead of my money controlling me, I control my money.

These days, I set quite a lot of financial goals, some I achieve and some I don’t (FYI – I still have the home loan). But that’s ok, I am human after all.

Achieving any goal, small or large is a rewarding process and that ‘buzz’ you get from achieving your first goal will set you up the desire to achieve all the ones to follow.

Anna Davidson

Anna Davidson

Paraplanner JEM Wealth

Anna is passionate about finance and practical ways to make money work for you. With a background in education, Anna works at JEM wealth and is a contributor to the Butler's blog.