Setting Financial Goals & Making a Plan (simple spreadsheet included!)

Setting reasonable goals is an important part of financial planning. However, many people struggle with determining what constitutes as “reasonable” and end up with stupid goals instead. We all have a tendency to dream big without actually planning or executing big, but there’s a way to stop setting yourself up for failure. I find shorter timelines are the answer to making and achieving goals. A short timeline necessitates a reasonable goal as well as provides a sense of urgency.

Below is a chart I regularly use in my own financial goal setting:

Screen Shot 2014-08-14 at 7.36.44 PM

 

Because I’m often managing multiple goals, I like to track them in one place so I know how much reaching for all of them will cost me — otherwise it’s so easy to think “I’m only saving $50 for this per month!” but if you’re doing it for 6 different goals you might end up feeling financially strapped.

Want the table for yourself?

I made the table using NUMBERS for Mac, but wordpress is currently not letting me upload the document. However…

Click here to download the EXCEL version!

Now I’ll walk you through it. The first thing you want to do is put in what you’re saving for, the interest/return rate on that account, what you currently have saved (it’s ok to set to $0!), and how much you plan to contribute per month.

Screen Shot 2014-08-14 at 7.37.48 PM

 

From my example you can see I’m starting with $6,000 and plan to save $604 per month (note: not real numbers!). The table will auto-populate with the data changes based on your inputs, but we’ll revisit that in a sec. The next step is to set your goals for each account by inputing them at the bottom of the table:

Screen Shot 2014-08-14 at 7.38.25 PM

 

Now the table might be doing wonky things based on how I’ve manipulated the formulas in each cell. Here’s what’s happening:

If you’re not saving enough each month for one of your goals, the “gap” cell will turn red and display the amount you’re short of this goal. In this example, I set the monthly saving of the Emergency fund to $80 a month, and now there’s a $25 gap between my goal and the amount I will actually finish with at the end of 24 months:

Screen Shot 2014-08-14 at 7.39.27 PM

 

$80/mo is not enough to save in order to meet my goal of having $3,000 in my emergency fund at the end of two years, so let’s say I increase my savings rate to $82/mo by changing the monthly contribution at the top of the table:

Screen Shot 2014-08-14 at 7.40.30 PM

 

Two things happen as a result: the number in the Gap row is now green, indicating that I’ve over-saved by $23 and some of the cells in that column have turned green:

Screen Shot 2014-08-14 at 7.41.18 PM

 

From the green-colored cells I can see that I’ll have met my goal. Always nice to be ahead of schedule instead of behind!

If I want to use this table for tracking my savings as well as planning, I edit the values in the appropriate cell at the end of each month. For example, when I click on the cell for January, the formula is as follows:

Screen Shot 2014-08-14 at 7.42.11 PM

 

But if I actually had $1,100 in that account instead of the $1,083 the table predicted, I will change that and enter my value:

Screen Shot 2014-08-14 at 7.43.33 PM

 

The rest of the table will auto-populate with the new calculated values:

Screen Shot 2014-08-14 at 7.44.30 PM

 

This way, you can go in to the table at the end of every month and enter in your new value and it will update the rest of the cells accordingly, and you’ll be able to see right away if you’re on track, behind or ahead of schedule — and you can adjust your monthly contribution accordingly.

Happy Saving!

Related Posts Plugin for WordPress, Blogger...

Comments

  1. Super useful, and clearly laid out. I love a good spreadsheet :)

  2. Awesome… great spreadsheet. I sent the link to your post to a few of my friends :)

  3. Neat spreadsheet. It’s been a while since I’ve done any serious budgeting or savings planning. I don’t know if I can force myself to do it either because I don’t really need to do it. I just try to be prudent with my spending, always get a good deal, and pay down debt aggressively. The rest usually takes care of itself.

  4. This spread sheet is awesome.

    I’m about $1,400 away from paying off my more than $28,000 in student debt. I’m hoping to have it paid off by the end of Sept. and then I’ll be looking to really buckle down on some post-debt savings goals. Your spreadsheet is definitely going to act as a starting point for me!

Leave a Reply