Posted by Lending Club :: April 20, 2009 @ 6:18 am

One of the difficulties in reaching personal finance goals, particularly in a cashless society, is that goals tend to be abstract. As a result, connecting your actions to your goals can be a challenge. Avoiding a small expense may help you to get out of debt faster, but it’s hard to convince yourself that such a negligible amount is making any real difference. By creating visual reminders of your personal finance goals, those goals will become a more conscious part of your daily life.

Personal finance goals can usually be divided into three separate segments: the reason, the goal itself, and the implementation. The reason is why you want to reach the goal and it often has nothing to do with the goal itself. The goal is what you want to achieve. The implementation is how you expect to achieve the goal.

Consider the goal of sending your children to college. The reason would probably be a parental instinct to provide for your children. Perhaps you want to give more to your children than you yourself received. The implementation would be your regular contributions to a 529 plan or other savings vehicle during the children’s’ lifetime. The goal itself would be achieved when your children reach college age and you have sufficient money to cover those expenses.

Each of these segments could use visual reminders to help you achieve the goal. A picture of your children, another of a typical college, and a third of your (hopefully) increasing 529 balance would suffice. Keeping these reminders in your life would help you to meet your goal. For example, you might keep a copy of these pictures in the credit card holder of your wallet. That way, you’d be reminded of your goal each time you reached for a card to spend money. Even though you might still make a purchase, you’d have to consider how that purchase would affect your ability to reach your goal.

You could also keep the reminders in other places. Perhaps a copy on your nightstand, near your alarm clock, would help you to spring out of bed in the morning excited to get to work and earn money to better be able to meet your goal. Another copy taped to your computer monitor could help you get through the day or avoid unnecessary online purchases.

By evaluating the reason, the goal itself, and the implementation to reach a personal finance goal, you can get a much better understanding of that goal. Adding visual reminders of each segment will provide motivation to reach the goal as quickly as possible. While the above example was for sending your children to college, nearly any personal finance goal -- such as getting out of debt or retiring early -- can be aided by this analysis and visualization process.

What are your reasons and implementation strategies to achieve your own top personal finance goals?