How To Achieve Your Financial Goals While Enjoying Life

Are you worried about saving for retirement? Would you like to buy a house?

Need help figuring out how to start? In this article, discover what financial goals matter to you and decide how to get there.

How do YOU define financial freedom / independence / success?

Imagine what you would do if you didn’t worry about money. Do you call this financial freedom? Success? Independence? Security? There are many terms for this feeling. Although lots of people want this, they often haven’t decided what this means for them. Not the dictionary or conventional definition but your personal definition, as specific as you can get.

Would you travel more? Start a business? Pursue hobbies you’ve put off for years? Ignore every distraction for the next 5 minutes. Stop and think about how YOU would describe achieving your financial goals such that you don’t worry about money. For the purpose of this article, let’s use financial success. You can substitute it with the term that resonates most with you.

Ask yourself

What does financial success look like for me?
How would I spend my time if money wasn’t an issue?
What scares me about my answer in no 2?
What would make me feel brave enough to do it?

Did your answers surprise you? Our goal is to make financial success tangible.

Is it an amount of money in your bank account? If so, how much? Or is it the freedom to do anything you want with your time? If so, what would you do with that time?

Here are a few responses from our readers:

“My husband and I rent our apartment. We are both freelancers. I enjoy freelancing, but I am always worried about paying rent. Financial success is a paid-off house. I’d always have somewhere to live.”

“Financial success is not needing to work for money. I want enough money coming from my investments to cover my monthly expenses. I need at least $3K a month.”

“I need a nest egg of $200K to handle any emergency. Financial success is peace of mind. Even if I lose my job, I will be okay.”

Now that you know what financial success means to you, let’s talk about why acting now is vital to achieving it.

Why you need to act now

In the US, we live in an inflationary environment. Inflation means that $100 can buy less each year than it could the previous year. For example, inflation was 6.5% in 2022. We felt it in higher food and gas prices.

You lose value each year you hold your money in cash. To counteract this, you invest, grow your money, and achieve financial success.

Let’s take two people – Sophie and Olivia:

Sophie invests $1000 monthly from ages 21 to 30. Over ten years, she has invested $120K. When Sophie is 65, her money has grown to about $1.25M at an annual return rate of 6%.
Olivia invests $1000 monthly over thirty years starting at age 35. She has invested $360K. When Olivia is 65, her money has grown to $975K at an annual return rate of 6%.

Sophie has more money than Olivia despite investing $120K, while Olivia invested $360K. No, you did not misread that. The answer is time and compound interest. Time’s ability to supercharge your money is one of life’s wonders! The more time you give your money to grow, the more money you will have. Both Sophie and Olivia end up with more money than they saved.

The earlier you take advantage of this, the better. You can start now and give yourself as much time as possible to achieve financial success.

Start today - small actions make a difference long-term

Sometimes, we are unaware of our self-limiting beliefs about money. Some of mine were:

“money doesn’t matter.”
“investing is too complicated.”
“I don’t have time to think about this now.”

Because I thought money didn’t matter, I had no goals for my money. I spent most of the money I earned in my 20s. It wasn’t until I turned 30 that I reframed how I saw money. After that, my net worth went from $26K to $1M in 5 years.

What are your self-limiting beliefs about money? Write them down. Now write ways you can counteract them. For example, a self-limiting belief could be “I can’t save.” Ask yourself what it would take to save. How much would you need to earn? What can you do to make more money? Are there ways to start small, e.g., save $50 a month?

Saving $1000 a month seems intimidating if you’ve never saved before. Saving $50 a month seems less challenging. Start where you are and increase your savings as you make more money.

The building blocks for financial success

It helps to understand what actions you can take to achieve financial success. We call these the building blocks of financial success. There are four building blocks:

1. Save

All financial goals require saving, whether to buy a house, invest, or pay off debt. It is not only how much you make but also how much you keep. Whenever you make money, put aside some of it for your future self.

Financial success examples: Save $250K for emergencies or save $2M for retirement.

2. Build Credit

Credit is crucial in the US. If you have no credit or bad credit, renting an apartment or borrowing money to buy a house is challenging. Your credit score determines your eligibility for loans and credit cards. It also affects the interest rate you get.

Financial success examples: Pay off $40K in student loans or improve my credit score to 780 before applying for a mortgage.

3. Make money

Let’s face it – the more money you make, the easier it is to meet your financial goals. In 2009, I made $41K and saved $7K – about 17% of my salary. In 2017, I made $150K and saved $70K – about 47% of my pay. When you make more money, it is easier to save more money.

Financial success examples: Get a raise of $20K or start a side hustle to make $40K extra a year.

4. Invest

Investing can seem scary. It doesn’t have to be. If you have a retirement account, you are already investing. For most people, it is better to take a simple approach to investing. You are more likely to underperform the market with complicated strategies. Start with stable assets like government bonds or diversified assets like passive ETFs. As you improve at investing, you can expand to other areas.

Financial success examples: Buy a house or earn $5K in investment income to cover expenses.

Now that you know the building blocks, use the power of focus to your advantage.

Decide on your most important goal for right now and let's make a plan

Are you thinking, “Can I achieve financial success?” You’re not alone. Big visions for financial success seem daunting. Yet, they evolve into achievable steps when you break them down.

Suppose your definition of financial success is “I want to save $200K to handle any emergency”. You can break this down into:

Figure out how much I am saving now
Create a budget to control my spending
Save $1K a month and invest my savings
Get a promotion or a raise to earn $15K more a year
Start a side hustle to make an additional $500/week
Invest $2K a month
Complete data analytics certification
Switch to a higher-paying job making $50K more a year
Invest $5K a month
Reach $200K goal

Following these steps, it could take 2 to 5 years to reach your $200K goal. It would feel impossible if you tried to do all the steps at once. Take it step by step. Focus on mastering an easy step before moving to a harder one to build your confidence and expertise.

Now it’s your turn. Make a step-by-step plan to achieve your definition of financial success. Be specific and set timelines for each step. It should be clear when you’ve completed a step. For example, instead of “save money,” write “save $500 each month”.

Take the first step in your plan

Taking the first step is often the hardest. Take one action today toward financial success. Pick the first item in your plan. Break it down into smaller steps. Make the first step something you can do today.

For example, imagine the first step in your plan is to save six months of expenses for emergencies. You can break it down into these smaller steps:

Open a savings account
Use the 3Es approach to create a budget
Calculate how much to save each month to meet my goal
Take savings out first when I get paid
Track expenses each month and adjust spending to stick to my budget
Save each month until I meet my goal

Do step one today. Time yourself. Things take less time. We postpone action because we have an exaggerated idea of how long it will take. For example, opening a savings account takes less than 10 minutes.

Enjoy your life while you work on financial success

It’s Friday night. Your friends invite you to dinner, a show, and drinks at a bar. You want to go, but you feel guilty about spending money. You ask yourself, “Do I have to choose between having fun or saving money?”

Instead of picking one or the other, build fun into your financial plan. It is easier to save for your goals if you factor fun activities into your budget. Spend on what you love and save on everything else. If you cut back too much and are miserable, sticking to your plan long-term will be challenging.

If you feel guilty about spending, consider free or cheaper ways to enjoy life. For example, you can host a potluck dinner at your place or invite friends to a hike in a local park. You can volunteer to plan Friday’s hangout and choose affordable options. You can filter restaurants by price and reviews on Google maps or look for free events on Eventbrite.

Hold fast - 8 ways to make your plan stick

“Hold fast to dreams, for if dreams die, life is a broken-winged bird that cannot fly”
– Langston Hughes

You know what financial success means to you, and you have a plan. For most people, it will take years to achieve your vision. Here are some tips to help you stick to your plan until you succeed:

1. Focus on your vision of financial success

Making decisions is easier when you know your end goal. For example, suppose your vision is $5K in monthly investment income to cover your expenses. Knowing this helps you evaluate investment options and focus on those that will get you to your goal.

2. Break down your plan into small steps

Big goals can be intimidating. Break down your goal into small steps.

3. Measure your progress

Seeing your progress will encourage you to complete your plan. For example, review the transactions on your credit card. You may discover new ideas to reduce your spending.

Or check the balance on your savings account. You may inspire yourself to increase your savings as your balance grows.

4. Create affirmations

Positive affirmations can help you reframe your self-limiting beliefs about money.

Create “I” statements. For example:

“I can achieve financial success”
“I am a saver”
“I spend on what I love and save on everything else”

Say these statements to yourself whenever you feel tempted to stray from your plan.

5. Write down your financial goal and stick it on your mirror

When you look at it, you will remember your commitment to financial success. You can do this!

6. Share your plan with a friend or family member

It helps to have support. Telling someone about your goal makes it real. When you tell someone your goal, you want to achieve it so you are consistent with what you say.

7. Track your progress with someone

Ask someone you trust to be your accountability partner. You both share your financial plans and meet monthly to discuss your progress.

8. Treat setbacks as part of the journey

Some things won’t go as planned. That’s okay. If something doesn’t work, think through why and adjust your strategy.