Money Is a Tool, Not the Goal (Part 3)

We’ve discussed the idea that money is just a price property

You want to give it a purpose by tying it to your values.

Once you know those values, it’s pretty easy to establish your financial goals.

If family is important to you, your goal might be to provide your kids with a college fund.

If you value your career, your goal might be to save up money so you can pursue a certain career path.

Of course, you can have multiple values and multiple goals, too.

Giving your money a purpose is the fun part, though.

After that, it’s time for the legwork.

Once you figure out what to use your money for, you have to learn how to use it.

Here are a few things that have helped me most in using money to reach my goals and keep my spending in check.

Think of it as a mini user’s manual.  

Treat Your Goal Like a Bill 

You’ve probably heard the old financial adage, “pay yourself first.”

It sounds completely played out, I know, but there’s a reason for that: it works.

Whatever your goal–saving for an emergency, paying off debt, saving for a cruise–factor it into your budget like a bill.

For this reason, I’m a fan of the goal-focused 80/20 budget, in which you put 20 percent of your income toward your savings and the rest of it (80% if you’re really bad at math) goes toward everything else.

It’s a simple way to budget, and you can adjust the numbers to favor your goal, depending on your expenses.

Whatever your own percentages look like, the point here is to prioritize your savings by treating it like a bill.

Prioritize Your Discretionary Spending

Have you heard of Warren Buffett’s “Avoid at All Costs List”?

Sit back, let me tell you a story.

Pilot Mike Flint says he was discussing his career plans with Buffett, and Buffett suggested a three-step strategy for prioritizing his goals.

First, he asked Flint to make a list of 25 things he wanted to do with his life in the next few years.

From there, he told Flint to circle the five most important things on the list.

Scott Dinsmore of Live Your Legend relays the rest of the storyWarren Buffett

Once the Top 5 planning session was over, Warren then asked “but what about these other 20 things on your list that you didn’t circle? What is your plan for completing those?” Steve replied confidently “Well the top five are my primary focus but the other twenty come in at a close second. They are still important so I’ll work on those intermittently as I see fit as I’m getting through my top 5. They are not as urgent but I still plan to give them dedicated effort.”

To Steve’s surprise, Warren responded sternly, “No. You’ve got it wrong Steve. Everything you didn’t circle just became your ‘avoid at all cost list’. No matter what, these things get no attention from you until you’ve succeeded with your top 5.”

You can use this with your finances, too.

Make a list of all of the discretionary expenses you enjoy.

Twenty-five is a lot, so maybe start with four or five.

Circle one or two expenses that matter to you most.

Then, try to avoid everything else on the list as much as realistically possible.

For example, my list looks like this: 

• Travel
• Home goods
• Clothing
• Face products

This means I prioritize my discretionary expenses on travel, something I love. ???????????????????

The rest are things I like, but I’d rather spend my money on something I love.

This comes with an important caveat, though: don’t feel like you have to ban those other expenses completely.

I’ve done that, and it backfires.

You get tired of depriving yourself and end up binge-shopping on those items, taking away from your goal even more.

Yes, this advice veers from Buffett’s a bit, but when it comes to money, we only have so much willpower.

Buffer accordingly.

You only have so much willpower, so buffer accordingly.

Think of Impulsive Spending as the Enemy of Your Goal

Similarly, it helps to think of impulsive spending as the enemy of your seed soil grow wealth

Chances are, the four or five items you’ve crossed off your list are problem areas for you (I know they are for me).

It’s easy to spend money mindlessly, and while there are lots of tips and tricks that can help with that, I find it most helpful to remember that impulsive spending is a roadblock to my financial goals.

It’s easy to get caught up in our emotions, brush off our goals, and justify our impulsive spending: “ I’ll treat myself, just this once.”

When I find myself thinking like that, I try to remember that this spending is the enemy of my goal.

This reminds me that my money has a purpose.

It’s also a great counter-argument to my own justifications.

I can break the rules and buy stuff just this once, but I’m taking away from things I’ve already decided are more important.

In some cases, I’m okay with that.

Mostly, though, I remember what’s more important.

Break Down Your Goals

You’ve probably heard of the elusive “Future Self.” goal image

Future You has her debts paid off, her retirement planned, and just generally has her sh*t together.

How does it happen?

That’s for Future You to figure out, not Present You.

Studies show we have a really hard time connecting our present and future selves.

In a study called Increasing Saving Behavior Through Age-Progressed Renderings of the Future Self, researchers tested the savings habits of participants.

They showed some of them an altered image of themselves at 70-years-old.

Researchers found that those participants who viewed a photo of their “future self” saved twice as much money in a retirement account than the control group, who were simply shown a photo of their present selves.

Here’s what the researchers reported:

“To people estranged from their future selves, saving is like a choice between spending money today or giving it to a stranger years from now. Presumably, the degree to which people feel connected with their future selves should make them realize that they are the future recipients and thus should affect their willingness to save.”

In short, your Future Self feels like a stranger. Not many folks are willing to regularly give a portion of their paycheck to a stranger.

It’s a common problem, and there’s a simple way to fix it.

And no, it doesn’t involve looking at a digitally altered photo of yourself at 70-years-old, although I guess that can’t hurt.

The fix: Break down your goals into smaller milestones.

Instead of thinking of your goal in terms of the big picture, crunch the numbers and calculate what you have to save today, this week, or this month.

For example, a goal to pay off $5,000 worth of debt in a year becomes a goal to save $13 a day, which is much more digestible.

It’s also a lot more present: you’re doing this today, not this year.

You are, in a way, linking your Future Self with your Present Self. calculator coin money save debt

Like I’ve said before, it’s not about the money.

Money matters, don’t get me wrong, but money is just a tool to help you achieve your goals–even if that goal is to get out of debt so you free up your cash to use on things that matter to you.

Once you give your money a purpose, it comes down to figuring out how to use that tool correctly.

These steps have helped me figure it out, and I hope they’ll work for you.


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Kristin Wong


Kristin Wong is a freelance writer who has written for MSN, Bankrate, and NBC News. She regularly contributes to Lifehacker and Mental_floss and is a recipient of the Society of Professional Journalists Northwest Excellence in Journalism award. Kristin chronicles her experiences as a full-time freelance writer at her blog. Visit:

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