Think about your big-picture financial life.
What do you see?
What do you want to see?
Setting financial goals allows you to make informed plans that move you toward the financial life you want to see.
As you think about what you want to achieve with your money, it’s important to remember that financial goals are as unique to each person as a fingerprint. There’s no “one size fits all” approach to figuring out what you’d like to accomplish. Things like, which stage of life you’re in, your aspirations and your current financial situation are just a few of the reasons your goals will be unlike anyone else’s.
While your neighbor, brother or friend might have some great financial goals for their life, they probably aren’t right for you and your situation.
So, let’s figure out how to decide what YOUR financial goals are.
What exactly are financial goals?
Let’s start at the beginning and define exactly what a financial goal is.
Financial goals are the objectives you put in place for your money over a set period of time. This includes strategies to save, earn, spend and invest your money. Your financial goals are typically determined by what stage of life you are in and what you hope to achieve.
For instance, a recent college graduate may have a financial goal of saving for a vehicle so they can get to and from their job.
A growing family with children, may be focused on saving a down payment for a larger home.
Someone nearing the end of their career may have their full attention on growing their retirement savings.
Two types of financial goals
Some financial goals can be accomplished relatively fast and others require more time, thought and planning.
Immediate or short-term goals
The first type of goal is something that you can or that you need to accomplish quickly. These are often easier to achieve and may give you the confidence you need to tackle your larger financial goals.
For example, if you don’t have an emergency savings, this should be an immediate priority. As you create your budget (here's how to make a budget if you haven't yet), it’s likely you will be able to build a significant amount in emergency savings within a year.
Other examples of short-term goals include, making and following a budget, paying off debt, and figuring out how to live within your means.
These are important goals that can be achieved quickly and get started on the right financial footing.
The second type of goal typically takes more time, and, often times, a long-term strategy. These goals are further away but come with great rewards.
The most common example is retirement. You won’t reap the benefits of saving for retirement for many years. But when the moment comes and you’re ready to retire, you will feel a great sense of relief knowing you’re prepared and ready for smooth sailing into the sunset of retired life!
Other examples that may not take quite as long as retirement are, saving for a down payment on a home, paying off a car, or saving for a child’s education.
Once you know the difference between immediate and long-term goals, you will make informed decisions on how you will accomplish your financial goals.
How to figure out your financial goals
Now it’s time to jump into the really juicy part – figuring out YOUR financial goals. Take all the time you need to thoroughly consider and determine your goals. This could be – this should be – life-changing for you. Once you act on your plans to reach your goals, you will see benefits.
Determine what’s most important to you
It’s great to dream big, but also be realistic about your financial canvas. Add anything you want to your list, and then sort through to determine what matters most to you. Maybe it’s important that you save to get a nice vehicle, but maybe you find it’s more important to save for your child’s future education.
Make sure your goals are right for YOU
One last time for anyone who needs to hear it – make sure your financial goals are your own. Your financial goals should be tailored to your needs and your situation. All your friends may decide they’d like to save for a yearly vacation, but that doesn’t mean you should too. Stay laser focused on your budget, and stick with the plan that gets you on the road to your financial dreams.
Separate your immediate and long-term goals
Decide which of your goals can be accomplished quickly and which ones require more time. Once you understand your timeline for each goal, you can come up with an appropriate strategy to apply to your budget.
Strategize - Make your goals S.M.A.R.T.
Time to make your plan of action.
Paying off all of your debt?
Saving for retirement?
Building an emergency fund?
Making sure you live within your means?
Starting your own business?
These are all excellent goals. But they all require more strategy than simply saying “I want to be better with money.”
Don’t be vague. Make your goals S.M.A.R.T. (Specific, Measurable, Achievable, Relevant, and Timely).
Here’s how to change a vague goal into S.M.A.R.T. goal:
Vague: “I want to pay off my debt.”
S.M.A.R.T.: “I’m paying off $6,000 worth of debt by contributing $116 every week to pay it off in a year.”
It is important to note, that while setting S.M.A.R.T. goals is a great strategy, sometimes you will have to adapt and adjust to unexpected financial changes. Life is full of surprises, so when it throws unplanned expenses your way, here’s how to handle them.
Build your financial goals into your budget
Include all of your goals in your budget so you can monitor your progress and keep track of your overall financial situation. Here are the 6 fundamental steps you need to make a budget that’s right for you.
Celebrate your small wins
To stay motivated as you work toward your long-term financial goals, break it up into smaller milestone goals. This keeps you motivated as you reach each goal along the way. Plus, you get to celebrate your small wins as you reach each milestone, which helps you stick to your plan. Here are some other strategies that will help you stick to your budget.
A goal without plan is just a wish. – Antoine de Saint-Exupéry
Once you come up with your financial goals, it’s time to make your plan to reach those goals. And you absolutely can reach them.
Remember your goals.
Follow your plan.
Reach your financial dreams.
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