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Mar 13

How To Set Financial Goals You Can Achieve

Reading Time: 3 mins

Preparing for a stable financial future requires more than just self-discipline. It requires careful planning and goal-making. Without a budget and planning, you are likely to fritter money away as you are not aiming for anything in the future and so can just enjoy yourself in the present. This approach can lead to high credit card debt and an inability to live within your means. Unfortunately, Bankrate observes that nearly half of Americans, and more than half of millennials, fail to properly plan.

But it is one thing to dream of owning a mansion or taking an extended sojourn to Europe. It is another thing to set a realistic goal, create a budget, and start saving rapidly. Here are a few tips for how to accomplish that and head down the path towards financial stability.

 

Set a Realistic, Clear Goal

There are couple key guidelines that should be considered when setting your first financial goal.

First, the goal should be specific. “I want to save more for retirement” is not a good goal. “I want to regularly devote 15% of my paycheck into a savings account and have $10,000 saved up in a year” is a much better goal. This way, you can recognize that you have accomplished the goal and feel proud of yourself for doing so.

Second, the goal should be achievable. Like New Year’s resolutions to lose weight, people often set goals which are completely unrealistic in order to show how committed they are to saving. But once the impossibility of the goal becomes obvious, they drop the concept of setting a budget entirely. Think about what you can realistically accomplish, and do not set a goal which would require you winning the lottery or having a great night at a live casino to achieve.

Finally, the first goal should have a set timeframe and deadline by which point you hope to achieve your goals. Without a timeframe, it becomes far easier to tell yourself that you will accomplish your goal “later” and it becomes harder to tell just how much progress you are making. If this is your first time setting up a goal, have a timeframe of one to two months instead of something more extravagant. Remember that you need to get used to the process of setting goals and living by the planned standards and jumping into the deep end is not going to help.

 

Monitor your Progress

You have set a goal of saving up or paying down a certain amount within a short period of time. But how do you ensure that you stick to said goal?

Any goal, even a small one, should be broken down into small chunks and check-ins. Once a week, or at least once per month, look at your finances and ask yourself some potentially difficult questions. Are you spending too much? Can you contribute more to fulfill your goal, and possibly complete it ahead of the deadline? Are you earning as much as you had planned beforehand?

 

Key Goals to Consider

Everyone’s financial situation is somewhat different, but we generally have the same goals. If you are not sure what your top priorities should be, here are some key goals to consider.

Controlling debt and spending should probably be your first short-term goal. It is easier for most people to cut back on spending instead of raising their income, and debt is the big killer that will prevent you from saving for a house or for retirement. When paying off debt, make sure to pay off higher-interest debts first so that you can secure yourself on an even financial footing as soon as possible.

After that, you can begin accruing an emergency fund so that you will not have to take out loans in the event of a disaster such as a car crash or severe illness. From there, you can think about getting a stronger insurance policy, and really begin saving for retirement.

 

You are not alone

Saving and setting goals is not something which you have to handle by yourself. There are resources which you can use to help. If you have investments such as a 401k, you should strongly consider consulting an investment professional who you can speak to personally. You can check in with them to discuss the state of your finances and investments. If you already have one, talk to them about having more frequent check-ins such as on a monthly basis.

Even if you do not, there are still free financial resources which you can use. Websites such as Investopedia or NerdWallet have tools to help you set up a budget, learn about personal finance, and set financial goals. Also talk to friends and family, particularly your parents. Your parents did grow up under different economic times compared to today, but their advice can still be useful with some modifications.

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