When it comes to setting financial goals, the point is to achieve them so you can enjoy financial security. Having financial goals on your radar is important in ensuring you don’t over-spend and set your personal finances up for long-term success.
Financial goals can be anything from savings to investments to debt repayment! No matter what you decide to focus on, you want to set goals you can actually accomplish so that you stay motivated and achieve them.
Financial goals with no real merit or plan supporting them are bound to leave your finances stagnant or depleting.
How to set financial goals
In order to set financial goals, you want to be realistic, but also optimistic. They are goals, after all! Take note of your starting point, think about what it is your finances are lacking, and start setting your goals. Starting is the most important part of any goal!
Examples of Financial Goals
What your financial goals are depend entirely on you and your lifestyle, but there tends to be a few that are good for everybody. Here are some examples of financial goals you should consider:
- Open a retirement savings account
- Pay off my credit card
- Create a budget
- Learn to invest in the stock market
- Save a downpayment for a house
Financial goals can be divided up into three basic categories: short term, mid term, and long term.
Short term goals are the kind of goals that help you establish your financial footing. Usually they are simpler and require a shorter amount of time to achieve than others. They’re sort of like initial steps that guide the tone for your future financial endeavours.
Creating a budget, paying off credit card debt, saving up for a useful purchase like a new computer, or cutting your monthly spending are all reasonable short term goals.
Mid term goals will probably take 3-5 years to achieve, whereas many short term goal can be accomplished in a matter of months. These goals will act as a sort of bridge to achieving long term goals.
If mid term goals were a point in your life, they’d probably look a lot like your 20’s: growing up, figuring things out, and making moves.
Paying off student loans, starting a business/ generating another stream of income, or even paying for a wedding are all good ideas for mid term goals.
Long term goals are undoubtedly the big ones. They are the goals you set that will ultimately set up your finances to truly support and protect you.
Long term goals may include things like living completely debt free, paying off your mortgage, or, the most common one, which is funding your retirement.
No matter what stage you’re at, as long as you are setting goals of any kind, you’re on the right track!
Setting SMART financial goals step by step
“SMART” stands for Specific, Measurable, Attainable, Realistic, and Time-Bound. They refer to goals that are not only achievable, but have a dedicated timeline to make them happen.
Here’s how to set SMART financial goals:
- Make your financial goal specific. Instead of having a vague goal like “save an Emergency Fund”, make sure you identify the exact dollar amount like “save an Emergency Fund of $3,000”.
- Choose your timeline. A financial goal isn’t real unless it has a due date. Choose a reasonable timeline that allows you to reach your financial goal. This can be a few months or even a few years, depending on the size of the goal. For example, you might want to “save an Emergency Fund of $3,000 in 12 months”.
- Outline your financial plan. Once you know the amount of your financial goal and when you want to achieve it, you need to outline your plan. This involves calculating the amount you need to put towards your goal on a monthly, bi-weekly, or weekly basis.
- Automate your process. The easiest way to ensure you meet your financial goal is to automate the progress.
- Check-in on your progress. It’s important to continually check in on your progress to make sure you’re on track with the goals you’ve set.
Extra goal-setting tips!
Following these steps should be pretty simple, but there are a few extra things to keep in mind that will help you achieve your financial dreams.
- Use a calendar and budget tracker to keep your money organized. This will help you manage your timeline and spending. You can check out our guide on the 7 Best Budgeting Apps to see which one is right for your money!
- Don’t forget to account for your expenses. You don’t want to idealize your goal’s timeline before considering your current financial obligations.
- Prepare for change. You must be aware of fluctuations in interest charges, fees that might pop up, or unexpected expenses that could deter your plan. While you can rely on certain things to be stagnant, finances can be a fickle thing.
- Take note of your starting point. Write down the basics of your financial situation. How much money is in your checking account? What debts do you owe? Being able to look back will help you plan future goals and recognize your capabilities.
- Evaluate your options. Check out different account options, robo-advisors, budget trackers, or any available tools that align with your goal. Do your research and make the most of your endeavour.
Recently, I’ve begun saving for graduate school in a high interest savings account. I was able to learn about competing interest rates and decide what works best for me which has really accelerated my savings.
For instance, EQ Bank offers a high everyday interest rate that motivates me in my savings even more. Looking into the available options and methods of saving urged me to re-evaluate aspects of my finances beyond my savings goal. In turn, I’ve gotten a better at managing my money!
Why should you set financial goals?
Financial goals are ultimately the key to financials successes. Without them, you run the risk of letting your personal finances exist passively and never developing positive habits that will support you throughout your life.
As I set goals, I learn more about money and become better at how I manage it. Setting financial goals is an excellent learning experience and way to keep all aspects of your finances on track, even those that are not specifically related to your goal.
Beginning my goal of saving for grad school has already urged me to cut my spending down and stick to my budget, because I am so adamant about achieving this goal!
I feel safer in the future of my finances because I have been developing positive habits that will carry through as I work on mid term and long term goals.
Knowing where you’re going may not be that straightforward, but setting financial goals brings you one step closer. And of course, when it comes to financial goals, the only thing better than setting them is accomplishing them.
I’ve definitely thought up my fair share of financial goals only to watch them slip through the cracks without preparing a proper timeline or means of achieving them.
By following these steps and taking into account some essential considerations, you can set financial goals you’ll actually accomplish!