How to Set Achievable Financial Goals

How often do you find yourself thinking about money? It probably crosses your mind at least once a day. You've probably made a mental list of all the things you need or want money for and how you would afford all of those things on your lists. Think of those mental lists as rough sketches of your financial goals.

Financial goals are objectives or targets that you hope to achieve at a specific time. They could be anything from taking a baecation to saving up for your rent, buying new Nike boots, or securing an emergency stash. Financial goals are priorities that you want your money to cover, and they could be things you actually need and also things you don’t really need but would be nice to have, like that fifth pair of shoes you’re only buying to fill up the extra space in your closet.

Short and long-term financial goals

Financial goals can be short-term or long-term. Short-term financial goals are immediate goals that you hope to achieve in a few days, weeks, and sometimes months. Examples are saving up to buy some furniture for your new apartment, setting up an emergency stash, and paying off some debt. Long-term goals, on the other hand, are goals that you hope to achieve really far off in the future. Some examples of long-term goals could be setting up a trust fund for your children, investment plans, starting a company and planning for retirement.

In this article, we are going to talk about what it means to set up achievable financial goals and the simple ways to do that.

Financial goals fall into different categories, which include:

While setting goals, it is important to be as real as possible with the targets and objectives that you set as well as the timelines. A major reason why people don’t accomplish their goals is because they set goals and timelines for those goals that do not tally with their reality. For example, someone who sets a goal to save at least 70% of their monthly salary so they are able to rent at one of the high brow areas when they have a ton of other pressing expenses would probably not be successful at achieving that goal. To accomplish your financial goals, they have to be SMART.

Specific
Measurable
Achievable
Relevant
Timely

You have to be specific about your financial goals. Take note of every aspect of that goal and how you intend to achieve it. A goal that says ‘save money’ isn’t very specific. It doesn’t state why you are saving money or how you are going to save money. A better way to put it would be to say “save 500,000 to go on a vacation with friends by September. I can save this much if I save 100,000 every month for the next five months”.

Also, it can be helpful to not just type your goals on a smartphone or digital memo but also write them down. Writing goals down have been noted to come with certain benefits, including motivation to see it through.

Make your goals easier to track by adding numbers and quantifying them. You need a certain amount of money to buy those Nike shoes. How much do the shoes cost and how much do you have to save and at what progression? All of this helps you keep track of your goal and how close or far you are to accomplishing them.

Here, creating a budget will help you know how much money is coming in and how much is going out. It’s also how you know what expenses are taking up most of your income, what expenses are necessary and those that aren’t. By setting a budget, you can tell how much money you can afford to put away for your rent, personal needs, an investment plan or your retirement income.

In order to set goals that you can achieve you have to be honest about where you are and where you want to be and what it will take to get there. What goals are short-term and what goals are long-term? What goals can you reasonably achieve and what goals are you certain would fall through?

Set realistic goals. The last thing you want to do is set yourself up for disappointment. Think carefully about your goals and then think long and hard about the ways you want to and the ways you can achieve those goals and then use that to determine what is achievable and what is not.

It is important to know your objectives for setting a particular goal and what you hope to achieve with those goals. Finding the why helps you get clarity but it also helps you gather motivation. For instance, why do you want to have a diversified investment portfolio before you are 50? How does that goal align with your life plan? In what ways is it important and why? These are some questions to ask to determine how relevant your goals are.

Knowing that you are saving 500,000 for a small getaway with friends, for example, keeps you on track to achieve the set goal. In this case, you know what the goal is for, why you have set it up and the thought of a getaway with friends keeps you pushing to make that goal a reality.

You cannot measure the success or progress of the goals you have set for yourself if there are no deadlines. Financial goals should not have an infinite date. To set goals, you should decide at what time you can reasonably achieve your goals, put time on it and track your progress.

By adding a deadline, you can create a reasonable timeline. This can be easier if you have an accountability partner who shares nearly similar financial goals as you do and would love to go on that journey together. That way, you can hold each other accountable to deadlines and mark milestones, too.

It’s important to set financial goals because they give you a clearer perspective of where you want to be and they give you a better understanding of your finances. Remember to set SMART goals and to be intentional about the strategies that you use to accomplish your goals.