It may seem strange, but many people don't know if they have financial goals. Even stranger, some think they have financial goals when they really don't. "Get rich" or "make as much as possible" don't qualify as goals, because true goals have to be measurable at different points in time in order to be of any real use.
The long and short of it
Financial goals need both a short- and long-term look. The key to successful goal-setting is to identify realistic goals and then keep your goals simple and measurable.
For example, instead of the "get rich" goal mentioned above, determine that you want to set aside a certain percentage of your income within six months as an emergency fund. Or, establish a longer-term emergency fund goal of three to six months' income in an accessible savings account within a two-year period.
Determine how much you can set aside each month, then start paying yourself first.
Keep it simple
Don't set goals with complicated details to be achieved in the distant future. Plans like that could discourage you from continuing. Start with a simple plan, reachable goals, and then go for it.
Most people have traveled from one place to another and used a road map at some time. Road maps are so useful because you can establish where you are, see where you want to go and then determine how you're going to get there.
If the term "budget" doesn't appeal to you, how about calling your plan a "financial road map"? You need to know where you are financially in order to set a realistic financial destination or goal; otherwise, you won't know how to get there.
Imagine that you want to arrive at a financial destination of $25,000 in savings. You won't know what route will take you there unless you know where you are financially.
You can't simply say, "All I have to do is save $1,000 a month for the next two years and one month and I'll have $25,000." Your math may be accurate, but you only make $3,000 monthly, and your mortgage and car loan payments total $1,200 monthly. Oops! You need a budget -- OK, a financial road map.
Been on this road before?
Where does your money go? Use a financial road map to help you identify areas where adjustments need to be made to create extra cash to meet your goals. Keep track of spending for 30 days. Identify where all expenses are going, including the cash you give yourself every pay period. Where do you spend it? Does your income match your expenses?
Develop a plan that will be your road map for monthly spending.
Avoid paying the minimum amounts on your charge cards. Add $25 to $50 per month to each payment. You'll get yourself out of debt quicker and save money on interest charges. One of the best investments for the average person is to pay off his or her credit card debt and then stay out of debt.
Too much month at money's end
That "too much month at the end of the money" cliche is no fun. You may be among those who spend more than 40 percent of their annual food budget in restaurants. Brownbag lunches for a month to see how much you'll save -- then bank what you didn't spend.
Money is a tool that you can use to reach short-term and long-term goals. "Do not weary yourself to gain wealth, cease from your consideration of it. When you set your eyes on it, it is gone. For wealth certainly makes itself wings like an eagle that flies toward the heavens" (Proverbs 23:4-5).
Short-term goals are current lifestyle goals such as debt reduction, savings and giving. Long-term goals will be accomplished over a number of years such as funding education costs, saving for retirement and giving an inheritance.
Learn to handle the smallest thing God has put under your authority -- your money. Luke 16:11 says, "Therefore if you have not been faithful in the use of unrighteous wealth, who will entrust the true riches to you?"
Establish self-discipline and put all assets and all spending under God's control. Then, once spending has been brought under control, determine how much you'll need to spend each month in each category of the budget -- road map -- and stick to the budget.
Settle the question of how much is enough, or you'll never be satisfied with your lifestyle.
The Bible doesn't prohibit borrowing, but it establishes specific limits on borrowing. If we follow God's biblical principles, we must not take on debt that we have no reasonable expectation of repaying.
Spouses need to talk with (to) one another and singles need to talk to a trusted adviser about their debt tolerance levels. Know what the Bible says about debt, and if your current debt load exceeds your comfort level, pray about finding ways to reduce it.
One important short-term goal is deciding how much to save -- a dollar amount or an income percentage. The amount of money saved isn't as important as your diligence in saving. Every dollar saved today is a dollar available for tomorrow's needs.
Set specific saving guidelines for your family. With discipline, savings can give freedom and peace of mind when inevitable emergencies come up. And, savings allow you to purchase with cash and shop for best buys.
Try to maintain three to six months' income in an emergency savings account. If you have seasonal or fluctuating incomes, the amount should be six months. Everyone living above the poverty level can save something, and even small amounts add up. Try to allocate 5 percent of your income -- after paying taxes and tithes -- to savings.
Perhaps the most important short-term goal for Christians is how much to give to God's work. If giving habits aren't established as a result of spiritual conviction, giving often declines when more money becomes available to the family.
Setting giving goals will help control impulsive or emotional overreaction. Unless giving to the Lord is planned, money may not be available once all other bills are paid.
Planning is necessary and scriptural. But don't ever lose the spontaneity that comes with serving God. If God reveals a need, even though you may already have given your planned amount, give as the Lord has prompted. "Give, and it will be given to you. They will pour into your lap a good measure -- pressed down, shaken together, and running over. For by your standard of measure it will be measured to you in return" (Luke 6:38).
Call it whatever you want, a financial plan, a budget or a financial road map. Just be sure you know where you are, where God wants you to go, and then be willing to make your plans for getting there.
This article appeared on the Baptist Press Web site on December 17, 2003.