Setting financial goals is a big part of achieving overall financial health. After all, goals 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? What do financial goals even look like? How do I know if I’m setting the right financial goals for myself so that I can live my financial best life? Answering these questions is why I’ve put together this guide on how to set the best financial goals.It's not like we're born knowing this stuff.
Then I took it one step further and whipped up a free workbook to help you get those goals down on paper, and make it easier to track, and stay accountable.
The workbook I’m referencing throughout this post is my free “Financial Best Life” Workbook and you can grab it here. But even if you don’t feel like giving your email for the free workbook, you can work with this guide on your own with just a pen and paper, or check out the Financial Best Life Starter Set.
Here’s what we’ll cover:
- How to set financial goals
- Examples of strong financial goals
- How do I decide which financial goals are right for me?
- How to take your goals and make them S.M.A.R.T.
- Sticking to your financial goals
- How to get back on track with your financial goals
How to Set Financial Goals
Setting financial goals only requires three things:
- thoughtful consideration
- the actual setting of goals
- ….and then shoring up our money habits to give ourselves the best chances for success.
See? Easy peasy.
But it isn’t enough to say, “I want to stick to my budget” or “I want to pay off debt.” For the best chances of success, we have to make them S.M.A.R.T – Specific, Measurable, Achievable, Relevant, Time-Bound.
Examples of Financial Goals
These are just 15 I came up with off the top of my head. They’re specific to me and my story, but here’s a post from The Balance on broad types of financial goals you can set if you’re still stumped after reading this list.
- I want to save up a $1000 emergency fund in 45 days.
- I’d like to create my first budget so I can cover my bills and still save money this year.
- I want to pay off $8,000 in 3 months.
- I want to put 20% down on a house this Spring.
- I’d like to do a No Spend Challenge for the month of February.
I’d like to track my spending for a month.
- I want to increase my side hustle income to replace my full-time earnings by this summer.
- Maxing out my 401k contribution by the end of the year.
- I want to earn an extra $500 a month from a side hustle this year.
- Begin to save up and pay for a car in cash (or pay off my car) so I don’t have a car payment.
- I’d like to start investing this year so I can watch my money grow.
- I’d like to ask for a raise at work.
- Give 10% of my take home income to charity this year.
- I’d like to save up and take a 2 week European vacation in the Fall and pay for it IN CASH.
You can use the examples above, but below are some things to consider when setting your financial goals AND the order in which to tackle them (how you prioritize these goals.) Obviously, we all only make a certain amount and can only tackle so many financial goals at a time.
Just pick a few goals that are the most important to you (once you’ve covered the basics, like setting up an emergency fund) and then focus on one, finish it and move along to the other.
How do I decide which financial goals are right for me?
Take Stock of the Year (or Months) Prior
The start of a new year is a great time to set financial goals because you have a whole, fresh year ahead. Before you begin planning the future – look at the past.
- What did you accomplish (financially) last year that made you proud?
- Is there something you wish you'd done differently?
- What is the #1 thing you’d like to do with your money this year?
Answering these things in advance will help you to set priorities.
Prioritize the Things that are Losing You Money
- Debt. It's expensive. Every dime that sits in savings is worth less when you have debt hanging out. And while it is hard to manage debt with other savings goals like retirement and emergency funds, the fact of the matter is that with interest rates on savings accounts so low, you need to pay off high-interest debt first in order to get ahead.
So when brainstorming your financial goals, prioritize the items that are costing you the most.
Finally…Throw In Some Savings Goals Too
Decide what YOU want
Don't forget to listen to your own inner voice. Ask:
- What do you want to accomplish?
- Which goal completion would make you happiest?
- Which completion would free you up the most to do something else you really want to do?
Once you've contemplated the four sections above, now you're ready to put “pen to paper” so-to-speak and draft those goals. Below is a four step system to follow to ensure your goals work for you rather than against you. To do this, we’re going to take a financial goal and make sure it follows the S.M.A.R.T. methodology.
How to take your goals and make them S.M.A.R.T
- I’m going to use the first financial goal example I listed above, the “I want to save a $1,000 emergency fund in 45 days.”
#1 – Set a Specific (or Quantifiable) Goal
“ I want to save $1,000 in 45 days.”
What makes this goal quantifiable?
- We know we want to save $1,000. That’s the real goal.
- This is way more specific than saying, “ I want to save up an emergency fund,” “Or I want to pay off debt.”
- This gives an identifiable number to shoot for, and it's very black and white regarding whether or not this goal has been reached.
#2 – Making It Measurable
How do we best measure this goal? Using our example, $1,000 in 45 days is easily measured – by the amount of money we’re able to save.
This is why financial goals make great S.M.A.R.T. candidates. Because they are (usually) numerically based, they’re inherently measurable by nature!
#3 – 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.
- Using my example, $1,000 may not be doable in 45 days.
- Depending on your salary, it may be more achievable to save up $1,000 in one year.
- Feel free to adjust as necessary to your own financial situation.
#4 – Making It Relevant
This is probably my biggest beef with using the S.M.A.R.T methodology. “Relevancy” is more of a business consideration than a personal one. How do you make a personal finance goal relevant? Of course it’s relevant – getting my financial shit together is incredible relevant to me.
- An example from The Balance states that relevancy is meant to take into consideration conditions in the environment.
- For example, maybe don’t blow all your money on vacation if you know you’re having a baby in the coming months. Etc. Etc.
- Relevancy means you should take into consideration any events or changes in your life that could prevent you from accomplishing your goals.
#5 – Time Bound (A.K.A. Set a Deadline)
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 smaller, shorter goal, preferrably one 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.
In our example above, we’ve already made our financial goal time bound by challenging ourselves to save up $1k in 45 days. And for those interested, here’s how I did just that.
Tricks to Use to Stick to your Financial Goals
- There are also four main ways that I’m able to stick to my financial goals and these methods are important. Not all financial goals are as fun as stacking cash in the bank or the feeling of accomplishment you get from paying off a credit card so it's important to think about how you're going to stay motivated with these goals while you're brainstorming them. Don't wait until you run out of steam to figure out a way to stay accountable!
Do it with a partner or community
Everyone is more successful when they have someone (or something) holding them accountable to their goals. For me, when I did my $8k in 90 Day Challenge, I put it on my blog specifically so my readers could keep me accountable. I didn’t want to fail in front of them.
Accountability doesn’t mean they have to be in the trenches, side-by-side with you working on the goal as well. It just means you have someone checking in on your progress and applying a slight bit of pressure (or guilt) if you’re behind.
Create a vision board
I have a big tutorial on creating vision boards, because I believe in them and think there is BIG MAGIC at play in how they work. Even if you don’t believe in the spiritual wisdom behind a vision board, there’s nothing wrong with creating a visual reminder of what you’re working so hard for.
- For financial goals, choose imagery of what your life is going to look life after you complete your goal.
- For example, put up an image of the Gucci shoes you want, or the beach you’re going to work from remotely once you save up enough to quit your job.
- A recent TD Study showed that 82% of business owners with vision boards believed they accomplished and achieved more.
Create Mantras for Yourself that You Repeat Often
Below are some of my favorites. And you don't have to do them all each day (although you can.) I like to have a repertoire of mantras because I like picking and choosing depending on what I'm dealing with each day.
(P.S. My Financial Best Life workbook has sections for you to write down some of your own.) If you’re setting your own with a notebook and paper, ask:
- What are you really struggling with?
- Which messaging would you like to really reinforce with yourself?
- What word or phrase really inspires you when it comes to meeting your goals?
Below is an example of the page in the The Financial Best Life Workbook where you can write down these mantras. I recommend hanging them in a place you can see daily.
Schedule Rewards (Yes! #Treatyoself)
This is something I have long touted as essential to debt payoff, but really, it’s important for all your financial goals.
- It doesn't matter how lavish or simple your rewards are, just so you set them in advance.
- Give yourself a treat for every month you do all the things you set out to do.
- I like to recommend no more than 5% of the balance you just paid off (if you’re paying off debt as a goal) for a treat.
How to Get Back on Track with Your Financial Goals
Setting goals is easy.
It's the breaking bad habits and staying disciplined part that usually gets in our way.
How hard is it to get back on track with your financial goals once you’ve slipped? Relax, it's pretty easy and you are the one in control, so don’t beat yourself up. Below is a blueprint for tackling the most common challenges that keep people from truly succeeding with their financial goals.
Overuse your credit card?
- Take some time to review your accounts to understand where your money is being spent.
- You may also want to take your credit cards out of your wallet, and only use cash or debit cards going forward.
- Create a plan to tackle debt and make a commitment to yourself that you won’t fall into the same patterns going forward.
Spend more than you make?
- The first step to tackling this problem is to create a budget. The Financial Best Life Starter Set always offers Budget Worksheets & Templates.
- Use it to review how your income compares to your fixed monthly bills (such as rent, insurance, cell phone) and your variable spending (such as gas, eating out, entertainment). Is there anything left to save? How can you cut back?
- Start by cutting the expenses that require the least amount of change to your lifestyle. For example, call a few car insurance companies to make sure you’re getting the best rate, or call your cell phone provider (Or, you can get BillCutterz to do it for you) to see if you’re paying for more data than you need. As you find ways to reduce your monthly expenses, set up an automatic transfer to your savings account so you aren’t tempted to spend the extra money.
Unable to really save?
- Commit to avoiding new debt
- Set up automatic transfers to your savings account or use these “save the change apps” that effortlessly save for you
- Consider earning more by taking on a side hustle (see here, here, here and here for all the inspo you need)
- Track your budget, debt, and savings manually with the spreadsheets and tools available in the Financial Best Life Starter Set.
Using Your Financial Best Life Workbook
So here's the tutorial for goal setting with the free workbook. I'll share what a sample action plan looks like and hopefully you can create one of your own too!
Part 1: What is the one big (financial) goal you'd like to accomplish this year?
And yes. You have to pick just one.
The funny thing about improvement is that it is a dish best served focused. If you really, really want to change something you need to give it your undivided attention.
Below I used a debt payoff example.
Part 2: Set Your Strategies
The “big goal” should be the priority, and the strategies are the more resolution-style goal you'd like to achieve in the next 365 days that supports the overall big goal. Think of them as milestones for your goal progress. Below is another example.
Part 3: Finally, the tasks – the meat and potatoes.
Tasks – the action items, the things you put on your daily, weekly, monthly to-do list that you cross off each day. These are what make you feel you're moving-shaking-making-progress. The beauty of it is if you do the tasks right, the strategies and the big goal should fall into place.
If you're wanting to get super crazy you can print out a set of these sheets for every aspect of your life that you have goals for: money, job, personal, whatever.You can see at the top the worksheets to be used for the “financial” plan and then ones you can use for any type of goal you’d like.
Whatever you need help with: budgeting, paying off debt, or tracking your earnings the Financial Best Life Starter Set ($10) has a worksheet to help you prep and plan. Use code “BFF” at checkout for 50% off.
Hopefully, will help you put together an action plan to make achieving your financial goals a reality. The steps above are how I’ve been able to pay off $8,000 in 90 days, buy a home at age 26, and save to leave my full time job.
The point is, if I can do it, so can you.
*Jordann Brown contributed to this post.