.svg){kind=spacer}
Setting a goal for yourself can seem intimidating, especially if it’s a large goal and you’re not sure where to start. You’re not alone! Plenty of people deal with this exact same feeling. One of the best ways to create and reach a financial goal is to plan backwards.
While it may be tempting to play things by ear and make the plan as you go along, for a higher chance of reaching your goal, it is essential to make a plan first.
Planning backward is exactly what it sounds like: Start with the end result you’d like, such as wanting to save up for a new refrigerator. Then, going backwards, list all of the steps you need to take to make this possible.
By doing this, you’ll have your destination in mind, along with a map of how to get there. Then you can proceed without worrying about getting off-course or wasting effort.
Before we take a deeper look at how to plan backwards, let’s remind ourselves how to set a goal using the SMART goal method. A SMART goal is Specific, Measurable, Attainable, Relevant, and Time-bound.
In this case, our goal is to:
S: Buy a refrigerator.
M: It will cost around $1200 dollars to buy.
A: This isn’t just a dream. If I stick to my plan, I will be able to buy it.
R: This is a need, not a want. My current refrigerator is old and breaking down, and I need a new one to store all my food.
T: I want to buy one before the end of the year (6 months from now at the latest).
Having a SMART goal makes it easier for us to stay on track toward reaching it, and planning backward helps us list out all the individual steps we need to take. Both go hand in hand.
Now that we have set our SMART goal of buying a refrigerator, let’s go over how to plan backward.
Step 1 is to break down our one big task into multiple smaller tasks, starting at the last step. You’ll be less intimidated by what you have to do if you break it down into easier pieces.
- Buy the fridge at The Fridge Store!
- Finish gathering $1200 to pay for it.
- To reach this $1200 saving goal, you need to save up some extra money over time in your bank account, because you don’t have that entire amount at the moment.
- To save up extra money, you need to make a budget to see how much money you are earning and spending per month, and calculate how much money you can set aside for the refrigerator to reach your $1200 goal.
Step 2 is to put the smaller tasks we listed above in the correct chronological order that you’ll complete them and set specific due dates for them. Notice how we are just reordering the above steps in reverse:
- To save up extra money, you need to make a budget to see how much money you are earning and spending per month, and calculate how much money you can set aside for the refrigerator to reach your $1200 goal.
- To reach this $1200 saving goal, you need to save up some extra money over time in your bank account, because you don’t have that entire amount at the moment.
- Finish gathering $1200 to pay for it.
- Buy the fridge at the Fridge Store!
Step 3 is an optional step to add due dates to all the tasks, now that they are in the correct order, so you can set deadlines for yourself to make sure you are keeping the right pace.
As another example, think of backward planning as something you do on long road trips. It doesn’t make sense to say “I want to see the Northern Lights.” and then jump into your car and start driving. Instead, you need to start at the end (the exact location where you can see the Northern Lights) and then plan this trip by going backward from the end point. To make this happen you need to:
- Research where you can even see the Northern Lights.
- Look at a map to see which route you need to take to this specific viewing location.
- Because it’s a long drive, decide where you’ll make stops for gas, food, and rest along the way.
- Make a packing list of things you’ll need for your drive and for once you reach your destination: camera, snacks, phone charger, warm clothes, etc.
By doing this, not only are you ensuring that your trip will be successful, but you are also breaking down a big, complicated trip into smaller, more manageable parts and avoiding the stress of running into any issues on your trip. This goes for most goals as well! Next time you try to set and reach a big goal for yourself, try backwards planning to see how helpful it can be for you!