Know your money motivations and financial goals
Now you know where you stand with your budget, debts and savings – we’re going to build your financial resilience for the future and set financial goals.
Feeling secure about money isn’t always within our control and as you can probably imagine, the knock-on effects of coronavirus were the biggest cause of financial worries in 2020.
So, we’ve made it our mission to help you to feel more confident when it comes to money and finances. Now that you know where you stand in terms of budgeting, understanding credit and debt and you’ve looked at making the most of your money – we can focus on your long-term financial goals.
- How does money make you feel?
- What are your money motivations?
- Are you miswanting?
- Having a financial plan
- Set your financial goals
How does money make you feel?
With so many purchases on finance, subscriptions or credit in general – it’s hard to know the different between credit, debt and when it becomes a problem.
One thing we’re all pretty good at knowing though is how money makes us feel.
We’ve put together five questions to ask yourself. You can do this on your own, with friends or with your family. There’s no wrong or right way to feel. It just may help you spot if you’re worrying about your finances without really knowing…
Five questions to think about how money makes you feel
How does talking about money make you feel? Are you happy talking about money with family and friends – or does it make you feel embarrassed, stressed or anxious?
How often do you check your bank account? Do you avoid looking at all and if so, why?
Do you ever buy something you can’t afford or impulse shop?
How often do you rely on credit for large or small purchases? Do you put meals and nights-out on your credit card?
What purchases do you feel good about making? Think about how long the happiness lasts.
What are your money motivations?
Money can influence how we act – just think fines for doing bad things and incentives for doing good. Not only that, but dressing a certain way or having the latest game can make us feel like we fit in.
There’s nothing wrong with these things. But we want to help you unpick some of the reasons why you spend on certain items and help set financial goals.
Some researchers say that our need to fulfil certain wishes can be the reason we want to spend our money on certain brands or items. Sounds intriguing, right?
Can you spot when your spending relates to one of these?
According to the Good Money book , the reasons we spend money are to:
- Protect ourselves
- Care for others
- Avoid disease (has never felt more relevant!)
- Make friends or gain status within a group
- Find or keep a partner
So, if you’re someone who is naturally very security driven, then you may be willing to buy an expensive security system that others may think is a rip off. Or, if you’re looking to make new friends then you might be the first in line to buy a university branded t-shirt.
Are you miswanting?
Miswanting. You may not have heard of it, but you’ll probably recognise it.
Miswanting is the situation when we mistakenly think something will make us happy. It can sound something like this…
“I’ll be happy when I get a bigger house.” “I’ll just be happy when I get promoted.” “I’ll be much happier when I reach my goal weight.”
We’ve all had or heard those thoughts. And may even have been happier when those things happened. Or were we?
Did those internet shopping impulse buys make us as happy as we thought they would? Or did the feeling of getting a new car last and solve all our problems? Pretty soon, our hit of happiness wears off.
Yes, a bigger house may give you more space. But, consider an increase in the cost of bills. There’s good and bad in every situation.
It’s not wrong to want or strive towards any of these things. But being realistic about how much happier you’ll be then will help to deal with highs and lows of spending.
Instead of focusing on material goals to make you happier, try:
- Spending time with loved ones
- Bring some healthy changes to your daily routine – have a look at our tips to looking after your wellbeing from home
- Look for ways that will save you time – whether that’s a shorter commute or getting help with chores
Having a financial plan
Financial wellbeing is a lot like health. If you’ve ever chosen to have a glass of wine or bar of chocolate instead of doing a workout, you’ll understand the difference between what we should be doing and what we want to do.
Spending how we want to, instead of how we should for a long period of time can leave you with less resources to be able to cope with a financial shock. Working out your financial forecast gives you a good idea of how you may be able to cope with a financial shock – or big life event.
Give some serious thought to what life may throw at you, how would you cope? What would you like to be able to do in those circumstances and how can you plan for them? The Financial Wellbeing website has some useful free resources for this, including a financial forecast spreadsheet to fill in.
How to set your financial goals
Setting financial goals is slightly different from your financial forecast. A forecast is having an idea of the amount of money you’re likely to have in the future, and what you’ll need to spend on. Like if you’re expecting to move to a bigger house or change job.
Financial goals are things that you can look forward to, or motivations for saving. Because, like most things in life, having a rough plan helps.
To set your financial goals, ask yourself:
- When are you happiest? (at home, travelling, with friends)
- What motivates you / are you interested in? (going to gigs, holidays, gardening)
- What are your goals for the next two, five and ten years?
Set yourself some time limits to try and stick to. If you’ve got debts, when do you want to be able to pay them off by? What are you hoping to achieve when it comes to retirement or looking at buying a house?
Have a look at our savings and insurance guide, if you haven’t already. It’ll give you some ideas the importance of savings and why it might help to have insurance.