Why Do You Want Financial Success?

An exercise that will help you focus on your financial goals

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To be successful at managing money, you need to have a very strong understanding of what I refer to as your big why. Why are you bothering to manage your money in the first place?

Plenty of people skate through life getting their bills paid despite not having a real understanding of where their money goes. Why are you taking this additional step of managing your budget? What is the motivation behind your desire to be financially responsible?

Motivation Behind Managing Money

After several years of writing, speaking, and talking to hundreds of people about their finances, I’ve noticed a very consistent trend. Most people aren't motivated by the idea of having a particular number in their bank account. People are motivated by the lifestyle and opportunity that money can provide.

In other words, people don’t want to be millionaires just for the sake of it. People want to be millionaires so they can quit their rush hour commute.

To manage your money well, you should spend some time thinking about your goals. Brainstorm a list of everything you might possibly want. Don’t hold back at this stage and don’t start editing yourself. That can come later.

Write down anything that pops into your head. Maybe you want to own a ridiculously expensive car or handbag. Maybe you’d like to start a charity that rescues injured animals. Maybe you want to provide free after-school tutoring to low-income kids.

Short-Term, Medium-Term, and Long-Term Goals

Whatever your goals, write them all out on a sheet of paper. When you’re done, start dividing them into three categories:

  1. Short term
  2. Medium term
  3. Long term

Short-term goals can be anything that you can accomplish within less than a year. For example, purchasing a large Christmas gift for your spouse, or renting out the VIP booth at a nightclub for your birthday party.

Medium-term goals are ones you can accomplish within the next five years, such as flying to Aruba to celebrate your 40th birthday, or perhaps getting married and throwing a wedding.

Long-term goals are ones you’d like to accomplish in more than five years, such as paying for your child’s college education, retiring, or paying off your mortgage.

Figuring Out the Cost

Write down what the total cost of each of these goals will be. Going to Aruba for your 40th birthday might cost $4,000. Throwing a wedding might cost $15,000. Go through every goal and write down a dollar figure.

Divide this dollar figure by the estimated number of months that are between today and that goal. It’s okay to approximate numbers. You might not be certain of when you'll get married, but if you think it'll be within the next three to five years, use four in your estimation. That's 48 months from now. Divide the amount of money you think you'll need - $15,000 in the example - by 48. The result is $312, which is how much you'll need to save each month between now and then to pay cash for your wedding.

Trimming Down Your Goals

Now that you’ve gone through all of these steps, you’re probably finding that the amount of money that you’d need to save each month is a significant sum.

In fact, it’s probably more than what you currently save and it might be more than you earn.

It’s time to start delaying or eliminating some goals. This the part of the process when you start editing down. There are probably certain goals that are so crazy you can cross them off the list right away (like buying an entire private island).

If you think deeply about your goals, you'll find some aren't a high priority, like owning a beautiful, expensive car or handbag. Then there are other goals that are so important you’re not willing to cross them off the list, like retiring when you're 65 instead of 75.



This exercise will help you understand the why behind your goals. It will also help you figure out exactly how much money you need to be saving to get to where you’d like to be financially.