When you’re in the early stages of your personal finance journey, the majority of your financial goals tend to revolve around specific numbers:
I need $12,000 in my savings account for my three-month emergency fund.
I need to pay off $45,000 in student loans.
I need to put $6,000 in my checking account by the end of the year.
Once you start achieving those goals, you’re probably going to set a few new ones — and you’re probably going to structure them the same way. “I need a three-month emergency fund” becomes “I want a six-figure net worth,” and so on.
However, as The Financial Diet reminds us, there’s more to personal finance than stacking up a big pile of cash.
"Being rich" is among the most empty goals a person can have. Accumulating money for the sake of a number misses the point entirely — life should be treated as a story you are writing, and money should be the ink that helps you write, not the story itself.— The Financial Diet (@TFDiet) April 15, 2019
Business Insider asked Financial Diet co-founder Chelsea Fagan to elaborate on this philosophy:
Money, according to Fagan, should be viewed as a way to facilitate a good life that provides things like security, comfort, freedom, options, and, occasionally, risks — not as a material to be hoarded.
There are two reasons why focusing on what you do with the money is more important than focusing on how much money you have.
First, because it’s always a smart idea to have a plan for your money. Sometimes there’s a specific plan: maybe you’re saving for retirement, for a down payment, or for a once-in-a-lifetime vacation. Other times, you’re saving and investing money now because you want more options in the future. (That still counts!)
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Second, because making your financial goal about an result and not about a number can often help you find ways to achieve that result while spending less money. Telling yourself you need to save up $75,000 before you can make a down payment on a house, for example, is a lot different than telling yourself that you want to find and purchase an affordable home.
Likewise, setting the goal of “visiting Paris” instead of the goal of “saving $5,000 so I can visit Paris,” might help you find ways of making the trip less expensive — and getting you in front of the Eiffel Tower even faster.
How do you structure your financial goals? Do you tend to tie them to numbers, or actions and experiences? If you switched your biggest financial goal around and based it on a result instead of an amount of money, even if that means thinking “I want to be debt-free” instead of “I need to pay off $3K in credit card debt,” would you be able to find a less expensive way of getting there?