A Guide to Setting Your First Personal Financial Goals

Setting personal financial goals are a big part of achieving overall financial health. They keep us moving forward and ensure that, down the road, we have the things we want. But what's the best way to set a financial goal, especially for a first-timer?

So many people start out setting their financial goals the same way they set their failed new years resolutions. They start big, they don't quantify their goals correctly, and they set a finish date that is too far in the future.

How many times have you heard this:

“I'm going to lose weight this year, like really, I gonna do it. This year will be different!”

There are so many problems with this type of goal. But instead of pointing out what not to do. Let's see what we should do:

How to Set Personal Financial Goals in Four Steps

#1 – Set a Quantifiable Goal

Instead of saying you are finally going to start really paying off your student loans this year, how about we attach a dollar value to that goal? How about “I'm going to pay $7,500 off my student loans this year”. Lauren did this in her $8k in 90 day challenge. This gives an identifiable number to shoot for, and it's very black and white regarding whether or not this goal has been reached. Paying off $7,500 in student loans was my very first financial goal that I set in 2012.

#2 – Set an Achievable Goal

It's important to set a goal that you can actually achieve. Instead of trying to accomplish some crazy goal, like paying off alllll the debt. Set something reasonable. For me, in 2012, my very first year of debt repayment, I thought $7,500 seemed like a good number. I had never tried to pay off my student loans aggressively before this, so I didn't know what I was capable of. I picked a number I thought I could achieve.

#3 – Set a Short Time Frame

A whole year is a long time to commit to a goal. So many things could change, and enthusiasm is certain to wane. To help make a goal more achievable, try setting a small goal, that will be reached a few months after setting it. Or, if you're sure a one-year goal is for you, check in periodically throughout the year to make sure you're on track.

# 4 – Build Momentum

Getting into goal setting can take some time. Learning to ramp up your goal setting can be a great way to positively reinforce your goals. Set smaller ones at first, and once you've had success reaching them, and you understand what you're actually capable of, set more.

Rinse, Repeat.

In 2012, I set three goals. I reached them all before September of 2012. So, in 2013, I ramped things up a bit. I set five goals, all of which are much more difficult to achieve than my 2012 goals. So far, I've reached three, and I'm definitely going to have to stretch to reach the other two before the end of 2013. I know what I'm capable of now, and I've correctly challenged myself.

Goal setting is an awesome way to motivate yourself to get off your butt, and accomplish things. Set your goals correctly to set yourself up for success.

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Having personal financial goals is a great way to get started down the right path - so learn how to set your first financial goals (and actually achieve them!)

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  • Marissa@Thirtysixmonths
    September 29, 2013 at 11:48 pm

    These are all great tips. Setting a quantifiable goal is really needed at it makes you more focused rather than being generally ok that you were able to pay of something, it will be more rewarding to see actual numbers.

  • Michelle
    September 28, 2013 at 11:17 pm

    Your point about setting a short (initial) time frame is so important. I love to set long-term goals but in order to achieve those goals I have to acknowledge that starting small is the only way I get anything done.

    • Jordann @ My Alternate Life
      October 3, 2013 at 12:37 pm

      Definitely! Setting long term goals can lead to all sorts of bad results – mostly because of procrastination.

  • Bryce @ Save and Conquer
    September 27, 2013 at 4:46 pm

    This method of setting short-term obtainable goals is not only good for reaching financial goals, but also for completing large long-term projects, either at work or home, as is mentioned in the comments, above.

  • Lisa E. @ Lisa Vs. The Loans
    September 27, 2013 at 4:24 pm

    Big, vague goals are rarely accomplished. Nowadays, I try to make smaller, attainable steps that eventually lead to the bigger goal.

  • moneystepper.com
    September 27, 2013 at 7:50 am

    Great tips. Setting goals using the “SMART” method really helps in actually achieving the goals that we set. However, “build momentum” is a great addition to this, and really helps. Set very achievable goals in the very short term, and very stretching goals in the long term.

    We, apparently, always set overestimate our short term progress and underestimate our long term.

    • Jordann @ My Alternate Life
      September 27, 2013 at 1:10 pm

      This is so true! I always try and use the SMART goal framework for my goal setting, but I think building momentum is so important, especially for first time goal setters.

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