Setting Financial Goals

Let's face it; managing finances has always been a hard nut to crack for almost everyone out there.


Here is my favorite book on setting habits that will help you with your financial goals on Amazon.


We have never liked a surprise car repair bill, an unexpected grocery list, or pet emergencies. If you're not prepared when a bill comes without any prior notice, and it interrupts your peace of mind, that alone is a sure indicator that you need to set your financial goals. Setting clear, easy-to-achieve goals is the FIRST STEP that you'll take on your journey of financial freedom.


setting financial goals: go get it


What are Financial Goals?


Let us put it simply, financial goals are your money plans that impact your 'Present' and 'Future.' In other words, where do you financially see yourself in the next five years? Or next ten years? How do you plan to reach your goals?


I was able to break free from most my financial problems because I sat down once a year and planned out what I'd like to achieve financially that year. Some of my goals I'd achieve in a month and others I'd really stretch and I couldn't complete them. But I tried and my finances turn out better. That is the wonderful thing about finances if you strive for a better financial life and you achieve 80% of your goal. You're doing 80% better than you would have otherwise. 


Your financial goals give you a point to focus on and keep you from spending frivolously. Goals can be further classified into two categories.

Short-term goals and long-term goals. Both have different outcomes based on their nature.


For example, I can't contribute $6,000 to my IRA account in a month. I need to break it up and make monthly contributions. $500 a month is much more achievable than $6,000 a month. The great part is something may come up, and I only put $50 towards my retirement. That is still $50 more than $0. 


Why set financial goals?

When you set financial goals, it's like putting on glasses that will help you see things differently and clearly. You start becoming money-wise. You can see opportunities where you can improve your finances. You are more self-aware when you're spending money you shouldn't. Now, all the focus is to hit that target you have set. You no longer drain your money on things you don't truly need. It can be anything. Even a cup of coffee – that you buy every day (but can prepare one for yourself at home).


When you set financial goals you start spending money mindfully


This isn't just a "spend less" article. If you focus on increasing your income, buying that daily coffee isn't bad at all. Just hold yourself accountable. For some people, it is much easier to increase income than to decrease spending. Figure out where you're at with how that balance and make it happen. Spending extra time at work to make that over time could pay for your month's worth of coffee. 


The Secret Formula of Financial Goals

how to set goals 

Setting financial goals is easier when you have a perfect formula to follow.

That is: S-M-A-R-T But what does it actually mean? Here's the breakdown.








Specific: Healthy financial goals are clear. Each goal has only one outcome. Say, you can set a goal to spend within the budget or invest a certain amount in setting up a new business. When your different financial goals combine, they start a healthy cash flow.


Measurable:  Your financial goals need to be quantifiable. You might be pressing yourself hard to control your expenses, but how would you know that you are inching towards your end goal? A great way is to keep a journal and track your investments, expenditures, and savings.


Achievable: Your financial goals must be realistic and achievable. You shouldn't aim for what is not actionable. Otherwise, you'll get lost in the world of disappointment.


Rewarding: Your set goals must be rewarding enough to motivate you to stay consistent. Remember, there is a delicate balance I mentioned earlier about dropping spending and increasing income. If you don't feel rewarded, you'll have a lower chance of achieving your goal. Find a way to get that dopamine from achieving your goals. If you're miserable while walking through your goals, you aren't doing it right. 


Time-bounded: Financial goals must be timely. You should allocate your goals in a specific time frame to achieve them. Automating your goals is the absolute best way to assist you when you're focusing on timely goals. 

Example: I want to save $100 a month, so I'll set up auto-withdrawal every two weeks from my checking. Early on, this is the best way to handle it as you'll later adjust to not seeing that money in your account anymore. 


How does setting a financial goal cause success?

Setting a financial goal is like charting a course for your financial future. It gives you a clear direction and purpose for your financial decisions. When you have a specific goal in mind, you are more likely to take the necessary steps to achieve it, such as saving more money, spending less, and making wise investments. By doing so, you can create positive financial habits that lead to long-term success.

What are the benefits of setting money goals?

There are many benefits to setting money goals. First and foremost, it gives you a sense of control over your finances. When you have a clear financial goal in mind, you are less likely to make impulsive purchases or waste money on things that don't align with your goals. Additionally, setting money goals can help you prioritize your spending, save more money, and make smarter investments. Over time, these habits can lead to a more secure financial future.

What are 3 outcomes that financial planning can accomplish?

Financial planning can accomplish a lot, but three key outcomes are:

  1. Improved financial stability: By creating a financial plan, you can identify and address potential financial challenges before they become problems. This can help you build a more stable financial foundation and reduce stress around money.

  2. Increased wealth: Financial planning can help you create a roadmap for building wealth over time. This might include strategies for saving more money, investing wisely, and reducing debt.

  3. Greater financial freedom: When you have a solid financial plan in place, you have more freedom to make choices about how you spend your money. This might mean having more money to travel, invest in your hobbies, or save for your future.

What are the three most important financial goals?

The three most important financial goals will vary depending on your personal circumstances and priorities, but some common goals include:

  1. Building an emergency fund: This should be your top priority, as having an emergency fund can provide a safety net in case of unexpected expenses or income loss.

  2. Paying off high-interest debt: Debt can be a major barrier to financial success, so paying off high-interest debt as quickly as possible is an important goal for many people.

  3. Saving for retirement: It's never too early (or too late) to start saving for retirement. By setting a goal to save a certain amount each year, you can ensure that you are financially secure in your golden years.

What is the most important financial goal?

The most important financial goal is to create financial security. This means having enough money saved to cover unexpected expenses, reducing or eliminating debt, and building a solid financial foundation for the future. Without financial security, it can be difficult to achieve other financial goals, such as saving for retirement, buying a house, or starting a business.

How do you develop financial goals?

Developing financial goals starts with understanding your current financial situation and your long-term aspirations. Some tips for setting financial goals include:

  1. Start with a clear objective: Identify what you want to achieve, whether it's paying off debt, saving for a down payment, or investing for retirement.

  2. Make your goals specific and measurable: This means setting a specific target (e.g., save $5,000 for a down payment) and a timeframe for achieving it (e.g., within 2 years).

  3. Break down your goals into smaller steps: This can make them feel more achievable and help you stay motivated along the way.

  4. Track your progress: Regularly monitoring your progress can help you stay on track and adjust your goals as needed.

Remember, financial goals should be tailored to your individual circumstances and priorities, so take the time to reflect on what matters most to you and what you hope to achieve in the long run.


There you have it – the reason you should set financial goals and the key attributes of your financial goals! So, are you ready to get on your first step to financial freedom? If so, great! Believe it or not, seeing your money grow is fun. Take out your notepad and start jotting down your initial plan right away. If it's not on paper, you have a much lower chance of completing your goals.


Looking for ideas for some goals you have? Here are 25 easy ways to save money and go green.

Leave a comment