12.5 Reviewing and Adjusting Your Goals

Financial planning is a dynamic process, and life’s unexpected events can affect your financial goals. That’s why it’s important to regularly review and adjust your goals to ensure they remain relevant and achievable. Whether your income changes, unexpected expenses arise, or your priorities shift, taking the time to reassess your financial goals helps you stay on track toward long-term success. Regular reviews not only allow you to adjust for unforeseen circumstances but also help you stay motivated by celebrating progress along the way.

1. Regular Reviews: Stay on Top of Your Goals

Financial goals should not be set once and forgotten. Just like any other aspect of life, your financial situation can evolve, and your goals may need adjustments to reflect new realities. Setting a regular schedule to review your goals ensures that you stay aligned with your current financial circumstances and progress.

  • How to Conduct Regular Reviews:
    • Set a reminder to review your financial goals at least twice a year, or more frequently if your situation changes significantly. You could review them quarterly, or after major life events, such as starting a new job, getting married, or having a child.
    • During each review, assess how close you are to achieving your milestones. Are you on track, ahead of schedule, or falling behind? Use this information to guide any necessary adjustments.
    • Example: Sophia’s Quarterly Review – Sophia set a reminder to review her savings goals every three months. During her reviews, she checked her progress toward her emergency fund and car down payment goals, making adjustments if her expenses increased or if she received unexpected income.

2. Adjusting Goals: Be Flexible When Circumstances Change

Life is unpredictable, and circumstances like job loss, medical expenses, or even windfalls like bonuses can significantly impact your financial situation. Being flexible and willing to adjust your goals helps you maintain financial balance without becoming overwhelmed by sudden changes.

  • How to Adjust Goals:
    • If your income decreases (e.g., job loss, reduced hours), adjust your goals by reducing your monthly savings target or extending your timeline. For example, if you planned to save $500 per month for a home but now can only save $300, adjust your savings goal and timeline accordingly.
    • If your financial situation improves (e.g., a salary increase, unexpected bonus), consider increasing your contributions toward savings, debt repayment, or investments to achieve your goals faster.
    • Life changes may also shift your priorities, and you might decide to focus on different goals. For example, if you’re now expecting a child, you may prioritize building a college fund over other savings goals.
    • Example: Carlos’s Goal Adjustment – Carlos planned to pay off his credit card debt within 18 months, but after an unexpected medical bill, he had to reduce his monthly debt payment. By adjusting his timeline and refocusing on smaller monthly payments, Carlos maintained his financial stability while working toward his goals.

3. Staying Motivated: Keep Your Goals Visible

Even with the best planning, staying motivated can be challenging when working toward long-term financial goals. One way to maintain motivation is by keeping your goals visible and front of mind. Whether you use a vision board, journal, or reminders on your phone, staying connected to your goals helps you remain focused on achieving them.

  • How to Stay Motivated:
    • Create a visual representation of your goals, such as a savings tracker or debt repayment chart, and place it somewhere you’ll see often (e.g., on your fridge or in your planner).
    • Use digital tools, like calendar reminders or budgeting apps, to track your progress and send notifications when you reach important milestones.
    • Celebrate small victories. Each time you reach a milestone, reward yourself with something small, like a nice meal or a personal treat, to acknowledge your progress and keep motivation high.
    • Example: Emily’s Motivation Strategy – Emily created a vision board that represented her financial goals, including saving for a home and building an emergency fund. Each time she met a savings milestone, she added a sticker to her board and treated herself to a small reward, like a dinner with friends. This helped her stay motivated through the long-term process.

4. Celebrating Success: Acknowledge Progress and Adjust Accordingly

Celebrating your financial progress along the way is essential to maintaining a positive mindset. Even if you need to adjust your goals or timelines, acknowledging your achievements and milestones can build momentum and reinforce your commitment to financial stability.

  • How to Celebrate Success:
    • Acknowledge each milestone you achieve, no matter how small. For example, if you’ve saved your first $1,000 toward a larger goal, take the time to celebrate this achievement before moving on to the next milestone.
    • Use these celebrations as opportunities to review what worked well and what could be improved in your financial planning. This reflection helps you make smarter decisions as you continue working toward your larger goals.
    • Example: Tom’s Celebration Strategy – After paying off his first $1,000 of debt, Tom celebrated with a movie night with friends. Acknowledging his progress kept him motivated to continue paying down his remaining debt.

Action Step: Schedule a Goal Review

Set a date to review your financial goals and assess your progress. Consider any changes in your financial situation that might require adjustments to your goals. Here’s how to implement a regular review and adjustment process:

  1. Set a Review Schedule:
    Choose specific dates, such as the end of each quarter, or align reviews with important dates (e.g., birthday, New Year) to check your progress.
  2. Assess Progress:
    Look at where you are in relation to your goals. Are you meeting your milestones? Have any unexpected expenses or income impacted your progress?
  3. Adjust as Needed:
    If necessary, adjust your monthly savings target, extend or shorten timelines, or reprioritize your goals based on new circumstances.
  4. Stay Motivated:
    Use visual tools or personal rewards to keep yourself motivated as you continue working toward your goals.

Conclusion

Regularly reviewing and adjusting your financial goals is an essential part of maintaining financial stability. Life changes, both expected and unexpected, can impact your goals, but by staying flexible and conducting regular reviews, you can make necessary adjustments to stay on track. Keeping your goals visible and celebrating progress, no matter how small, can help maintain motivation and ensure that you remain focused on achieving your long-term financial objectives.

Reflection Questions:

  1. How often do you review your financial goals, and how can you improve your review process?
  2. What changes have occurred in your financial situation that might require adjusting your goals?
  3. How do you plan to celebrate your next financial milestone, and how can that celebration keep you motivated?