My dear Friends,

many of us have the distinct feeling that we are heading for stormy waters. We are in uncertain times, and there are many questions: Is the pandemic over soon? Is inflation rising, and will the stock market nosedive?

Wouldn´t we all love a crystal ball right now? But, rather than trying ourselves at making predictions, we should delve into some goal-setting to weather uncertain times.

But how does one set financial goals in uncertain times? Let´s explore some recipes for financial goal-setting.

Losing control

Especially in times of uncertainty, goal-setting is the only way to stay grounded. Having a goal means being in control. Being at the steering wheel gives us peace of mind, and we are less susceptible to stress.

2020 and 2021 destroyed plans and goals; many suffered from a feeling of no control anymore. We feel threatened, stressed and doomed.

Losing control is a nightmarish feeling, and we often fall into the trap of giving up altogether. We stop goal-setting because we feel sidelined and helpless.

Mental wellbeing

When it comes to goal-setting, we can identify varying categories of goals. We can set a goal in each category or multiple goals within one category, allowing our focus to fall on specific or multiple areas requiring particular attention. Above all, it contributes to our mental well-being. Once we reach a goal, we are happy and less stressed.

Our brain is not designed for uncertainty because we still operate with the brain of a Neandertal. We need a stable environment where simple predictions can be made for the near future.

Continuous uncertainty puts us into severe mental overwhelm. As a result, we can suffer from anxiety and depression.

Having a goal, however, gives us the feeling of hope, reassurance and self-determination. Reaching a goal boosts our confidence because we develop the skills we need to achieve our goal. We envision the target, and we have the arrow. This experience teaches us that we have the ability to master a demanding task.

Goal-setting is the first step towards planning our future; this gives us the mental strength and the ability to be successful even during uncertain post-pandemic times.

Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon we must vigorously act. There is no other route to success.

Pablo Picasso

What exactly is goal-setting

Clearly, it is the most powerful tool for staying motivated, whatever the time or disruptions from the outside.

In 1990, Latham & Locke published their work “A Theory on Goal Setting and Task Performance”.

Their primary assumption is that goals and feedback drive motivation and performance. So, goal-setting is a powerful instrument to maintain control over things, especially in uncertain times.

Latham & Locke outlined the five principles of a goal:

In short, a goal is an intended achievement or the completion of a task within a specified time.

Two important factors are needed to achieve this, a certain level of competence and a lens through which the current performance is monitored.

Why is it so important

Imagine you know exactly what you want but have no idea how to get there. This is why we need goal-setting!

Goal setting is about planning for the future and gaining control over your life. Your mindset has to adapt, and your attention gets focussed on goal-relevant behaviour and away from affairs you can not control.

A 2008 study found that people who set goals and engage in skill-oriented planning significantly improve their mental well-being.

Basic goal setting proposition ( Miner2005)

1. Because the required effort needs to be in line with the difficulty of the task, motivation is high, and performance is energized.
2. It needs a high degree of motivation to persist in activities over time.
3. Attention is drawn to relevant behaviour and away from behaviour or actions which are irrelevant or detrimental to the achievement of the task.

Setting a goal encourages the search for new strategies and novel ways to utilize our skills. Visualizing the goal empowers us to push our abilities to increase knowledge. In return, these actions will boost self-efficacy and self-confidence.

Many studies have shown that setting challenging yet attainable goals increases the prospect of pursuing and fulfilling ambitions. Having a clear vision of a goal will most likely close the gap between current ability and desired objectives. With this in mind, let’s look at some of the research related to goal setting.

Skills needed

Tips for personal goal setting

Personal goal setting is a personal endeavour; only you know what you want to achieve. The following outline will help focus your attention on the personal goal-setting process and guide you toward successful personal goal attainment.

Rule#1: Never more than three

It might be tempting to approach goal setting with gusto, and while enthusiasm is a good thing, it is important not to rush into too much too soon. Limiting the number of goals you initially set makes you less likely to become overwhelmed by the tasks ahead. Setting just a few initial goals will allow you to make a start on the journey while avoiding the negative emotions that accompany failure.

Rule#2: Focus on short-term goals

Especially during uncertain times, it is better to set short-term and more realistic goals. Setting short-term goals such as “I will assess my net worth by next month” enables more frequent opportunities to review and acknowledge the achievement of goals. More frequent experiences of success result in greater positive emotions and increased motivation to set additional goals or a combination of short, medium and long-term goals.

Rule#3: Set positive goals

Reframe negative goals, such as “I want to stop overspending”, into more positive terms, like “I want to have more control over my finances and will review my spending habits”. With negative goals, the initial motivation often comes from a place of negativity, for example, “I want to stop bad spending habits because I am afraid to end up in poverty”. These negative connotations can lead to self-criticism and de-motivation.

Goals for finances

The best goals for the year will depend on where you are in your financial journey. You might already have some financial goals in the making. However, it’s always good to see where you stand and update your goals if needed.

#1 Start your very own Emergency Fund

Starting your personal “Emergency Fund” is an important goal. This fund will be your very own financial support system. It will allow you to weather any change in life. Be it a divorce, widowhood, job loss, illness, old age or other surprise expenses without going into debt (you might not be able to do so).

How your fund is structured and how much money needs to go into the fund on a monthly basis depends on your age, status (married or single) and job situation. This fund should have enough money to cover your living expenses for one year.

Commit to setting aside a certain sum every month that goes into that fund and make sure the money gets invested. You can start investing with very small amounts by using Robo-advisors. Once you have six-digit amounts of money in the fund, investing becomes more complex, and it is best to employ an advisor.

#2 Your personal goal-setting

Financial goals are objectives or milestones that you want your money to cover at a specific time. Whether it’s building a freedom-or emergency fund, changing your investment strategy, aligning your portfolio strategy, or taking a sabbatical, your financial goal needs to be clear. Keep in mind that financial goal-setting is not only tied to purchases.

You will have short-term goals, like having enough money to travel around the world or buy a specific piece of art.

Long-term plans include setting up a charitable fund, a real-estate investment or increasing your net worth.

Suppose your goal is to start budgeting to supervise your spending habits better. Make a monthly plan, and diligently record your spending habits on a weekly basis. Check out where you achieved change on a quarterly basis and check your actual savings every six months.

With regards to your portfolio/freedom fund, you will have outlined a long-term goal and midterm goals to be able to weather uncertain times. Measure your progress and check your investments on a quarterly basis, aligning with your needs if necessary. Investing is always a long-term proposition which needs perseverance and calm.

Financial timelines

Short-term financial goal-setting: 12 to 24 months

 Money for short-term financial goals should be easily accessible and is best kept in a savings account. You can contribute to these savings accounts on a paycheck or a monthly basis.

• Saving for a special vacation
• The emergency fund
• Saving for a special gift you want to give to someone
• Planning a wedding
• Splurging on a designer outfit
• A meaningful donation for a special cause

Mid-term goals: 2 to 5 years

Mid-term goals will require more planning and a bit more money than short-term goals. You might have these goals later down the road or as part of your yearly goals. But, the choice of the right saving account in uncertain times might prove daunting.

Savings accounts are not the best idea at the moment as their yield is probably below the current inflation rate. A better solution might be a money market account, a time deposit account or a cash management account.

• Buying a home
• Starting a business
• Saving for a sabbatical
• Starting a charity

Long-term goals: 5+ years

Because you’ll be on the journey to achieve a long-term goal for many years, losing focus and purpose is easy.

Reminding yourself why you have a financial goal is important to you is key to achieving that goal. Since you won’t need the money right away, investing is the best strategy for a long-term financial goal. Depending on the amount of money you intend to invest and the skills you have, you would use a Robo Advisor, a financial advisor or a wealth manager.

• Building your freedom fund
• Investing for retirement
• Investing to increase your personal net worth
• Buying real-estate
• Start-up investment

Net worthy goals

Getting your financial life structured impacts nearly every other aspect of your life, so it’s always worthwhile to reevaluate your situation and strive for change if necessary.

You might already have some of these goals checked off the list! However, it’s always good to see where you stand and update your goals if needed.

• Do a financial health check: Allow a month to complete. Make a list of everything you own, and I mean your clothes, your home ( if you actually own it), assets invested or not, and include anything where you have shared ownership with your spouse. Now make a list of your debts- any debt from credit card to mortgage or any other loan you might have. Add up and deduct the sums; the difference is your net worth.
• Build an emergency fund: This fund should be easily accessible and have enough money to get you through 6 months of an emergency. This might be a divorce, illness or job loss. Assess how much money you will need and how much you can spare every month to add to the fund. Allow 1-2 years to complete.
• Establish a personal freedom fund: allow for a month to get started and several years to come to fruition. There are many reasons why women are financially dependent. Having decision-making power is about self-worth and self-respect. So, ensure you have some personal funds where the decision-making power is yours. This account should receive funds on a regular basis (monthly). Either with an acceptable part of your salary or a previously established (husband) sum of household money. Funds you owned before you married or any personal inheritance go into that fund and remains yours to decide upon.

Some mind-gym goals

• Learn to invest: Allocate 20 minutes every day for learning about finance, economics or investing.
• Identify bad habits: Fix a month during 2022 in which you eliminate all non-essential spending. This entails the weekend trip, spending on make-up, clothes, shoes, theatre, museums, books, subscriptions etc. Whether rich or poor, many have a tendency to overspend. Bad money habits can prevent you from reaching your financial goals and set you up for failure. 
• Ask for help: Find adequate help within the next three months. It can be hard to ask for, especially when you think you know everything you need to know. However, it’s sometimes necessary for your financial well-being. Managing and choosing the right investment strategy can be overwhelming, so seek advice. However, it is extremely important that you understand all your options and the associated costs such advice entails.
• Monthly money date: fix a time with your husband to have a monthly ” money date”. Make sure you are both aiming for the same goal. Keep the mood light, make it enjoyable and be honest with each other. This extra bonding time will strengthen your marriage.

Conclusion

Financial goal setting is crucial for everyone, including women, for a multitude of reasons. First and foremost, it empowers women to take control of their financial well-being and build a secure future. Women can prioritize their financial needs, dreams, and aspirations by setting clear financial goals.

In short, financial goal setting is essential for women because it empowers them to take charge of their financial future, break free from gender-related financial disparities, and pave their way to long-term financial success and independence. So, let’s embrace the power of setting goals and creating a brighter and more financially secure future for women everywhere.