The beginner's guide to thinking about setting financial goals

Thinking about setting some financial goals this year?

Sounds simple enough right? But simple doesn't always mean easy

When it comes to managing our personal debts and credit cards, savings and investing, many people are quick to look for a sequence of simple steps to follow (or a three-minute blog to read) to achieve what can usually be a complex outcome.

If a fast solution isn’t found, ‘it's obviously the wrong option’ so we quickly browse on elsewhere looking for that dopamine hit of ‘New’ and never really get to where we need to go.

Read in this article:

What are we really battling with?

If we don't learn to face our very personal and individual history about money matters, we may never know what we're fighting against, and what we're fighting for.

We have to get our thinking right before we can get our money matters right.

When we’re all looking for a simple answer to a complex question, we’re tempted to overlook two key realities:

1. financial decisions are usually full of complex motivations and triggers that have little to do with money - and more to do with childhood habits and our learned responses during stress, and
2. we’re battling clever credit card technologies that take advantage of our very human nature to procrastinate, and seek pleasure now and delay looking at the payment for it till later.

The idea behind ‘You have to get your head right, before you can get your money right,’ is understanding that rather than merely reacting automatically to a situation, you can learn new ways to resist the lure of endless retail therapy and recognise the triggers to your impulse behaviours.

• This ability to pause and consider what's really happening with our money matters, is a cornerstone of financial maturity and effective financial relationships.

Attitudes towards money, like all things, start in childhood

Like most people's attitudes towards money, they somehow start in childhood.

So the question remains, ‘what do you do if you’re still working from childhood attitudes towards money and want to move forward and create your own new ideas about your money matters?

When you were growing up what was the attitude towards money in your home?

For many of us in the sandwich generation, our parents never spoke about money; in fact, it was considered rude to speak about.

What's your money story growing up?

• Was money never spoken about?
• Was the source of money a mystery to where it came from?
• Was it a constant source of argument between parents and partners, or a ever-present frustration to a single parent?
• Was it a fleeting tool to help you keep up with ‘the Jones’ or a responsibility to be avoided?
• Can you recall if each of your parents' default attitudes towards money were the same or different? Who was the primary saver who was the spender?
• Were you raised by a single parent where resources were limited or suddenly halved, were there arguments about court-ordered child maintenance payments or divorce proceedings and financial agreements? 
• Alternatively, perhaps money was plentiful, but the price for it was the absence of parents working three jobs to pay for one house.

Is it any wonder many people today bring with them a money mentality that can be traced back to childhood experiences?

Now before you jump off the cliff to a happier place, stay with me - all this is to encourage you to accept one simple premise; our attitudes towards money are usually unconsciously given/modeled to us in childhood - experience shapes the mind.

You can give yourself the tools that your parents were not able to offer you as a child.

Reflecting upon our childhood experiences provides an opportunity to see and change old habits that are no longer working for us, and better understand ourselves and our moneyismes.

I'm not judging for a second, I’m just pointing to the exit door.

I know the power of being comfortable in a negative cycle.

Experience shapes the mind so reflecting upon our own childhood experiences provides an opportunity to understand ourselves better and gain insights about what first shaped our attitudes about money.

Where to start?

Commit to doing the work you need to do to understand your earliest money attitudes and then see if you're still prepared to live your life by them.

Start with understanding who’s in your financial neighborhood?

Every parent will tell you ‘good company makes our children better’ and bad company, well … usually doesn’t.

• Still today, we’re all influenced in some way by the mental and emotional neighborhood of who we hang out with, speak with, read about and admire.
• If you were to ask yourself, who are the 5 friends you spend the most time and life with, what's important to them and how are they choosing to live their financial lives, would you recognise any similarities?

There's a reason why habits are hard to break - they’re there to help keep us alive; but left unexamined, they can blunt our ability to hope for a better future and keep us entangled in childish attitudes to modern money matters.

My own early lessons in my money life

Growing up in a working-class family, the skill of delayed gratification was never something I actively learned, because there just wasn’t a surplus available to use. So any delay was more resource based frustration and not a behavioral discipline I learnt.

But what I did learn was that;

• all worthy achievements require some level of sacrifice, inconvenience and discomfort,
• we all need time to allow our savings to compound over time into meaningful outcomes, and
• you may need to overcome the general idea that life is required to be always comfortable.

My biggest financial struggle

As I grew into adulthood I saw that a balanced life would lead to ordinary results and being addicted to pleasing people and keeping up with 'the Jones' is a recipe for disaster and mediocracy.

• Early on in my professional life, I had to find a way to overcome the middle-class idea of continually spending money as part of my ongoing identity.
• I had to decide to live my life in a way that helped me begin to control the outflow of money, otherwise, my life would forever be vulnerable to calamities and sudden expenses.

And until I changed my attitude and learned to live below my means and make investing and saving a priority, I felt caught on a hamster wheel expending a lot of effort going nowhere.

Resist the insanity of adult self indulgence

Trying to amass wealth without controlling spending is like trying to fill a bathtub without plugging the drain. If you want to get ahead, you need to think carefully about how to live below your means and without the need to compulsively display your wealth and luxury.

There is a price to pay for uncommon financial rewards.

Trying to amass wealth without controlling spending is like trying to fill a bathtub without plugging the drain

Learn how to have difficult conversations about money matters

Many money problems today stem from our inability to even talk sensibly about money.

Many people are understandably reluctant to have difficult conversations, but not because they are not wanted, but because they don't want to inadvertently add to the stress of a situation or make it worse.

Most of our money problems are behaviour problems — so when we fix the behaviors, we fix the money problems.

So much of the shame around money and consumer debt levels – making it, losing it, spending it, investing it or refinancing debt – so much of the avoided conversations around money is because we don't learn to have real conversations about what matters most; including money.

If we had more conversations around these matters, we would change the way we show up in the world.

Understand what we prioritise gets our attention and our learning

The reality is, everything we know we’ve had to learn from someone or somewhere.

• If you're fortunate enough to have been given a head start by money savvy parents or successful friends who talked about money and normalised conversations about it, great.
• If that has not been your experience, well there's just more to learn.

What's the risk if I do nothing?

If you continue to believe that talking about money is taboo, is rude or is inappropriate, if you continue to avoid invitations to learn new skills and have difficult conversations, you'll never grow your abilities to talk about it, be curious about it and better manage it.

You’ll risk being stuck in that space.

If you want your future to be better than your past, maybe it's time to accept you have to get your head right, before you can get your money right.

Drew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses.  He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn.  Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.