People often ask me if their budget looks good, that is, is it sound and workable. While I may be tempted to provide a simple and encouraging response, I first have to ask: What financial goals are you trying to achieve? Are you trying to get out of debt or save for retirement?
Zig Ziglar is credited with saying: “If you aim at nothing, you will hit it every time.” I love this quote because it keeps before me the question: What am I aiming at; or if you will, what are my goals?
A goal simply defined is an end toward which effort is directed. It’s the finish line in a race. It’s the netted area at the end of a soccer field. And so when you think about the runner or soccer player, all of their effort is directed toward crossing the finish line or getting the ball in the net.
Isn’t this the same kind of effort we should have toward achieving the goal of our budget? Yet too often we don’t have goals in mind when we put our budget together. We leave out the most important element of our planning – the goal!
Wayne Gretzky once said: “You miss 100% of the shots you don't take.” For myself, the essence of this quote suggests to me that I won’t know that I can achieve something unless I take a shot at it. How do I really know I can’t achieve something unless I try? And if I don’t try, I will never know. Yet too many of us don’t try. We don’t try to achieve our goals because we never establish any.
What should we be shooting for? What should our financial goals be?
Well, I would suggest this is both personal and yet basic. Personal in the sense that everyone’s finances are their own. Their passions and interests in life are uniquely personal to them. Yet goals can also be basic, established in common sense and God’s word.
The driving force in Crown Financial Ministries plan is the milestones (goals) found in their Money Map. Like the person driving down a road, there are milestones one will see as they head toward their destination. So it is financially, there are milestones you can reach as you reach toward your goals.
Even Dave Ramsey speaks of these goals, but he calls them baby steps. I like this word picture because who can’t take baby steps as an adult. They are small and very achievable. And each of these baby steps represents a goal.
Both Dave Ramsey and Crown have established a set of goals that a budget would be built to achieve. And both are driven by the underlying principle that debt is bad!
Here are Crown’s milestones:
1. Save $1000 for an emergency fund.
2. Pay off credit card debt. Increase savings to one month’s living expenses.
3. Pay off all consumer debt. Increase savings to three month’s living expenses.
4. Begin saving for major purchases, retirement, and college education.
5. Buy a home and begin investing. Begin paying down your mortgage.
6. Home mortgage is paid off. Children’s education is funded.
7. Retirement is funded. You are free to volunteer time for the Lord.
Given this set of “basic” goals, you can now build a family budget.
For example, let’s assume you have reached Milestone 1 and have $1000 saved for emergencies – Great! Now you need to set your goal to Milestone 2. Your budget now needs to be focused on paying off credit card debt and increasing your savings to one month’s living expenses. Your budget needs to reflect a strategy to achieve this goal such as the debt snowball. Armed with this budget, you are on the road to achieving this goal.
What I want you to do now is ask yourself: “What are the goals I am trying to achieve financially?” And then: “Does my budget reflect the effort I am making toward achieving these goals?”
Lastly, if you don’t have goals, make them. After all you miss 100% of the shots you don’t take. And if you have goals, make sure you are making the effort, establishing strategies to achieve them by having a plan (budget).
I will close with my story about Milestone 6. I had never given any thought to paying off my home mortgage early. In fact, every time I refinanced my mortgage, I did so for another 30 years! I was simply bought into the idea that I would have a mortgage for the long haul, if not my entire life.
But one day, my wife and I attended a Sunday school class that suggested I could pay off my home mortgage in five years or less. Given the fact that I had 29 years to go on my mortgage because I had just moved to Colorado, I thought this goal was nuts! Really, my mortgage was $150,000 and you are suggesting that I can pay that off in five years or less.
Yet, I thought it a noble goal, one that I never accepted as possible. Yes it was aggressive. Yes it seemed impossible. But I made it our family goal. We put a plan together that set us on a course to achieve this goal. And most importantly, I believed we could do this as a family.
Did we achieve this goal? Yes, in four years we had a new home and we paid cash for it! While at first I thought it impossible, once I dismissed that thought and said it is possible, my thinking was freed to achieve the goal.
When I reminisce about this achievement, I am reminded of the scene in Star Wars, when Luke is learning the ways of the force from Yoda on his home planet of Dagobah.
Luke’s X-wing fighter sank into the swamp and Yoda suggests to him that he has the ability to lift the ship out of the swamp and move it to firm land. Luke, doubtful, tries and for a moment begins to achieve his goal. The ship starts to lift out of the water, but Luke loses concentration and the ship sinks back into the water. Luke walks off in disappointment over his failure.
Yoda, the wise and powerful jedi master that he is, uses the force to lift the ship and transports it to solid ground. As this was happening, R2D2 alerts Luke to the situation and he stares in amazement and disbelief as he exclaims, “I don’t believe it!” To this Yoda says, “That is why you fail.”
Take away: You have to have goals you believe are possible. If not, you will fail. Setting impossible goals are worthless. They only disappoint and discourage.
Yet goals you can believe are possible are powerful and encouraging. Couple this with creative thinking and good planning; your goals will be achieved.
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