A goal is a wish your heart makes when you are wide awake and ready to start getting things done. And it is time to get things done with your money—to set and reach your financial goals.
Saving money is all well and good in theory.
It is pretty hard to argue having more cash in your pocket could ever be a bad thing.
But what are you saving for? After all, money is just a tool. If you do not have concrete financial goals, all those hoarded pennies might end up floating in limbo when they could be put to good use.
Figuring out where your money should go might seem daunting, but it is a lot of fun. You get to analyze your priorities and decide exactly what you think you should do with your hard-earned cash.
Talk about adulting.
But to make the most of your money, follow a few best practices while setting your goals. After all, even if something seems like precisely what you want right now, it might not be in the future best interest. And you are playing the long game… that's why they are called goals!
To keep yourself from deciding your financial goals are, "buy the coolest toys and cars, get deeply into debt and watch my credit score plummet" — all super easy to do — we have compiled seven simple steps to help you with setting your goals.
They will help you set goals and create intelligent priorities for your money.
That way, however you decide to spend your truly discretionary income, you will not leave the 10-years-from-now version of you in the lurch.
First Things First: How Much Money Do You Have?
You can't decide on your short- or long-term financial goals if you don't know how much money you have or where it's going.
And if you're operating without a budget, it can be easy to run out of money well before you run out of expenses — even if you know exactly how much is in your paycheck.
So, sit down and take a good, hard look at all of your financial info.
Figure out how much money you have. It might be in checking or savings accounts, including long-term accounts like IRAs. Or it might be wrapped up in investments or physical assets, like your paid-off car.
Assess any debts you have. Do you keep a revolving credit card balance? Do you pay a mortgage each month? Are your student loans still hanging around?
Figure Out What Matters to You.
From the practical and pressing to the impulsive and distant, put everything on the table for inspection and weighing.
You've probably thought about other life goals: getting fit or healthy, becoming more intentional with your time, or learning a new skill. But what about money goals?
Financial goals are where you want to be—financially—in the next five, 10, and 20 years. Or even next year. You've got to think about the big and small things when you're writing out your goals.
And yes, you have to write them out. Goals are dreams in action. And the first step to putting them in action is writing them down. When you put goals into words and keep them in front of your face as both a reminder and a motivation, you're beginning to bring them to life. So, please give them a breath. Write them down.
Sort Out What's Within Reach.
What will take a bit of time, and which must be part of a long-term strategy? When you examine your own goals, you'll discover that some are broad and far-reaching, while others are narrow in scope. Define your purpose clearly, being particular and detailed.
Prioritize Your Goals
Developing a financial goals chart is an excellent way to begin this process. Here are the steps you should follow to set up your goal chart:
1. Write down one personal financial goal. It should be specific, measurable, action-oriented, realistic, and it should have a timeline.
2. Decide if your goal is Short-term, Mid-term or Long-term
Short-term financial goals take under one year to achieve. Examples may include taking a vacation, buying a new refrigerator, or paying off a specific debt.
Mid-term financial goals can't be achieved right away but shouldn't take too many years to accomplish. Examples may include purchasing a car, finishing a degree or certification, or paying off your debts.
Long-term financial goals (over five years) may take several years to accomplish and, as a result, require longer commitments and often more money. Examples might include buying a home, saving for a child's college education, or a comfortable retirement and create a timeline for that goal. This may change at any time based on your situation.
3. Determine how you will reach that goal. Include saving, cutting expenses, earning extra money, or finding additional resources. Decide which is the best combination of ways to reach your goal and write them down.
All of that might sound daunting, but it's best to set incremental goals. Prioritize, then achieve. After accomplishing some of the more manageable goals, you gain confidence in your decision-making, motivating you to achieve the more difficult targets that require more time and discipline.
Reevaluate Your Goals Now and Then
Life changes, people change, goals can change. That's okay. Don't abandon a dream just because it's going to mean hard work. But don't hold on to an outdated goal just because you don't want to feel like a failure. Accepting that you're heading in a different direction than you once thought isn't a failure. It's actually healthy!
Reevaluate your money goals every year, every six months—and maybe every month if you want! Never be afraid to make changes, so your goals fit where you are and where you're going.
Monitor Your Progress
Monitor your progress towards achieving your goals. At each check-in, ask: Am I earning as much money as I expected with my investments and savings? Am I contributing enough?
If you're working with an investment professional, ask them how frequently you should meet to discuss your progress and if you can check progress at other times on your own, too.
If you're investing and saving without a professional, designate time to look at your account between now and when you need to reach your goal. Review your progress every month for short-term objectives and quarterly and annually for longer-term goals.
Find Someone You Trust to Talk Through Your Goals With.
This needs to be someone who can give you a reality check and encouragement along the way—someone who'll check in on your progress and cheer on your accomplishments. Having accountability means you don't leave your dreams on your shoulders—you pick someone to help you carry the load.
Summary. There are resources to help everyone stay on course. Financial apps for goal tracking can be helpful. Technology offers several goal ticklers, alerts, and prompts that can provide an excellent road map.
There are also old-fashioned methods. A picture of yourself affixed to the refrigerator door, perhaps simulating that enjoyment of retirement on a secluded beach, might make for a pleasant visual stimulus.'
When the scale finally tips in your favor, it's only human to seek a reward, such as some chocolate cake. That's true in the world of finance, too. When you achieve your money goals — either through incremental progress or the retirement finish line — there's nothing wrong with celebrating a job well done
Bottom Line - Goals are dreams with work clothes on. So, get them dressed and ready to come true.
Part of being an adult is realizing; no fairy godmother makes your money wishes come true — which is good because it also means your dollar bills won't turn into pumpkins at midnight. The trade-off is, you'll have to work to make these financial goals come true. But you can do this — because it's worth it.