Navigation software is great. Open an app, pop in a destination and off you go, just like that. Wouldn’t it be great if everything was that easy? A map directly to where we want to go, turn-by-turn, step-by-step. Automatically adjusting in case you miss an exit, getting you back on the right track. As advanced as this technology is, without a destination, it’s pretty useless. Imagine being given random turns and directions, who knows where you’d end up? Your finances are the same way, without a specific destination in mind, you won’t go anywhere at all.
Set Your Final Destination with Waypoints on Route – Your first step with finances should be making both long and short-term goals for yourself. Where do you want to be financially in a year? How about three ,five, or ten? You can start with the short-term and work your way up, or set the final destination and figure out the smaller steps to get there, but the important thing is to figure out where you want to be and how you’re going to get there.
You wouldn’t tell your app just the state or city you want to go to, you give it a very specific address. Do the same with your goals. Saying “I want to save money” and “I want to save $300 a month” are very different. Being “close enough doesn’t cut it with finances. Set a real, achievable (and that doesn’t mean easy) goal for yourself and you’ll be more successful.
Show Turn-By-Turn Directions – “In 300 feet turn left, then keep right”, your app has detailed instructions and so should you. Once you have your goals, you should figure out how you’ll achieve them. Have specific easy short steps – do something every day, no matter how little, to get to your destination. Make a meal at home, don’t buy a morning coffee, or walk somewhere instead of driving. Everywhere you look, there are lots of ways to take little steps towards your goal.
Avoid Toll Roads – Nobody likes paying tolls to drive from point A to point B, and it’s no different on your road to financial freedom. You should avoid paying any and all unnecessary interest or fees. This is wasted money you won’t get back. Pay debt off as soon as possible and never take a loan out again (except maybe a mortgage). Pay credit cards on time to avoid late fees, and when you get to investing, start off with low-cost index funds.
Follow the Determined Route – Once you have your route to financial freedom set, follow it. Make sure to take all the necessary steps you’ve laid out to get to where you want to be. Sure, there might be a few obstacles in your way, the occasional pothole or traffic jam, but stay the course and keep making progress every day.
Recalculating – Even with our navigation apps helping us, we still miss exits and turns, but our little travel buddy is there to instantly get us back on the right track. Shit happens in life, things change, for better or worse. For as much planning as you might do, something will come up that you just couldn’t plan for. Don’t worry about it, take a deep breath and recalculate. Find a new way to your next goal. You might not be able to do it as fast as your app can, but the important thing is you find your way back. This could mean the destination changes a bit, but so be it, there’s nothing saying the first destination you pick is where you have to end up. The important thing is to know where you’re going and how you’re getting there.
Jeff is a fan of all things finance. When he’s not out there changing the world with his blog, you can find him on a run, a Mets game, playing video games, or just playing around with his kids.