Gaining Perspective

 How many times have you set out a big goal financially, but then failed to complete it? Most of us have done this many times because the goal is to big or there are to many different competing goals and so we get totally overwhelmed and quit. Maybe your goal has sounded something like I will get on a budget, start saving for retirement, pay down some debt, go on a vacation, pay off a car loan, and save some money for my kids college this year. In reality that is to much to get done in a year, unless you have super human powers. However in five years you could be very well on your way to accomplishing many of those goals.

 During a recent sermon series at my church called Margin, which addressed creating space in our financial life, my pastor shared this. "We often overestimate what we can get done in a year, and underestimate what we can get done in five years". - Chris Payne, New Charlotte Church.

In light of this simple truth, here is one exercise for gaining perspective on where you can be in five years.

Step 1: Figure out what your one year household income is.
Step 2: Multiple that number by 5.
Step 3: Write that number down.
Step 4: Figure out how much money you need to accomplish your MOST IMPORTANT goal.
Step 5: Now think about how you can use that pot of money to accomplish your most important goal.
Step 6: Take specific and intentional action towards that goal.

If you start now and become intentional about where you want to be in five years, you will soon start to realize that you are making progress towards your goal.

Example Family
Step 1: Household income $50,000
Step 2: Five years of income $250,000
Step 3: $250,000
Step 4: Pay off the car loan of $15,000.
Step 5: Wow, $250,000 is a lot of money, maybe you can figure out a way to pay off the car, and then start saving for the future.

Step 6: Paying off $15,000 is not likely to happen in a year, but could you do it in two years, at $7,500 a year or $625 a month? In all likelihood you are probably already making a car payment of something like $300 a month towards the loan, so you would only need to find another $325 a month. Where to find an extra $325 a month becomes the question to ask your self. 

Here is a sample of how to find an extra $325 a month. Decrease your groceries by $100, your clothing by $100, your family entertainment by a $50, and your eating out by $75? The important thing is that you take the time to figure out where you will spend less money to accomplish your goal.

What goal are you currently working on? Please leave a comment.

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