How To Set Financial Goals

It is essential that when you are setting goals that you are very clear on the why and the how. Why do you want to have more followers on Instagram? How will you do it? The how will give you those actionable steps that will help you to meet your goals. Especially your financial goals.

Why Is Reaching Goals So Important?

We all know that goals move us forward in life. But why is it essential to set and reach goals? 

Goals give us focus. They give us something to aim for, and a reason to do something. Although there is a joy in not having a clear plan from time to time, it is better to have a direction and a focus most of the time. 

You can measure your progress when you set goals. You might be earning $10k now, but want to aim for $20k. Those incremental increases, working more productively, will see you meet that goal. And you will be able to measure your success. 

Seeing your success and meeting smaller goals will give you the motivation to go further. You will be able to push yourself when times get tough, and the focus on the goal gives you motivation. 

Reaching your goals gives you a boost of confidence, too, as well as purpose. Both are very powerful and have an entourage effect; the more you have, the more you get. 

Six Steps To Setting Financial Goals

1) What matters to you most? Is it having $12k in savings? Is it a new car? Is it investing in properties, instead of simply browsing a property website? Ask and answer some questions based on what you are hoping to achieve. 

2) Which of your goals are long-term, and which are short term? Be realistic. 

3) Make sure that your goals are: 

a) Specific

b) Measurable

c) Achievable

d) Relevant

e) Timely

This is the SMART goal setting strategy. 

4) Your budget is going to make an impact. You can still save $12k by saving smaller amounts each week, it will take longer, but it is still possible. If you have a well-set budget, it will help you see more clearly what you can achieve. 

5) Automatic savings can make a lot of difference here. Put money aside without thinking about it, and you are more likely to save faster. 

6) Measure your progress every month. 

Here are a few examples of specific, measurable, and transparent financial goals to help you put your own together better. 

Improve Your Credit Score

This would be a long-term goal and has many steps between the initial planning phase and completion. You will need to make a note of all of your debts and pay them off. Look at all of your outgoings and find space in your budget to make those payments. When you qualify for better loans, they are actually cheaper too. 

Improve Your Income

There are many ways for you to improve your income. One of them is to get skills that people are happy to pay for. You no longer need to head back to college or school to do this, but you need to make sure that you aren’t taking on too much. Do you want to progress in your current role, or are you looking to get a qualification in something else? 

You can start taking classes locally for many skills, and there are many online learning portals too. In some cases, some mentors can help you clarify this idea and move forward with your plan. 

Make A Budget

And once you have made it, you have to live by it. Many people find budgeting boring, or that it doesn’t work. But determination comes into play here. There are two ways you can do your budget. 

You can focus on your debts and the lack of funds

You can focus on what you do have, and where you can grow

According to Ric Edelman, “nobody got rich by focusing on their debts”. 

When putting together your budget, make sure you take into account what you do have, too, not just where you need to make ground. 

Achieving Those Financial Goals

It is essential that with each financial goal, you note which style of goal it is. Short-term goals can usually be met within a year. These are things like paying off small debts, buying a new sofa, or saving a smaller amount of cash. 

Mid-term financial goals are usually something under 5 years. These might be a new home, a once in a lifetime holiday, paying off 50% or more of your debt, or getting a new qualification. 

Long-term goals are those that will take 10+ years to achieve. Saving for college tuition, paying off 25% of your mortgage, launching a new business. 

The significant part of your goal-setting process is that you are clear about what you need, when, and how you intend to achieve it.