Setting Financial Goals (and Keeping Them!) – A How-To


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, I'm going to share a three step system for setting goals. It's not as daunting as the length of this post leads you to believe. It's actually just three stages – thoughtful consideration, setting goals, and then shoring up our money habits to give ourselves the best chances for success. See? Easy peasy.

First, The most Important Things to Consider When Setting Financial Goals

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 financial last year that made you proud? What do you wish you'd done differently? Answering these things in advance will help you to set priorities.

Related: How to Goal Set Like a Champion, 21 Financial Resolutions for the New Year

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.

Related: 67 Ways to Pay Off Debt

Finally…Throw In Some Savings Goals Too

Having a nice emergency fund before you pay off debt is important to keeping out of the cycle of using credit to cover the unexpected. Realistically, will you really be able to accomplish everything? Probably not. You never know what could come up, but what's the quote? You miss the shots you don't take?

Think of your financial goals like that. At least throw in one savings goal this year to make your to do list more well rounded.

Related: 8 Ways To Build Up Savings in the Next Twelve Months

Decide what YOU want

Sure, you can follow my advice or use the ideas you find on my blog and others to brainstorm a set of financial goals for yourself. Just don't forget to listen to your own inner voice. 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.

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How to Set Personal Financial Goals in Four Easy 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.

#5 – 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.


Setting goals is easy. It's the breaking bad habits and staying disciplined part that usually gets in our way.


This is also true when it comes to reaching your long-term financial goals.

Unless you win the lottery or inherit a windfall, being able to, for example, pay off all your debt, buy a house, or retire early takes time and commitment. It also takes the right mindset. In fact, the key to knowing if you'll really reach your long-term financial goals has a lot to do with your money habits how you answer the following questions:

#1 – Do You Make “Fun” Purchases On Your Credit Card?

Using your credit card from time to time to cover an emergency is one thing; regularly using it to pay for nonessentials could mean you're headed for trouble. It's a sign that you're not only overextended but that you're also not being realistic about your money situation.

It's all too easy to swipe your credit card and deal with the consequences later. Just remember it will be hard to get ahead financially if you're willing to finance a life with credit cards that you can't really afford.

How to Get Back on Track

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. You can sign up for the free Debt Repayment Tracker from Financial Best Life to help you get started.

#2 – Are You Able To Spend Less Than You Make?

This is a pretty basic concept, but it’s the reason most Americans have very little in savings. If you answered yes to the previous question about using your credit cards, then you are spending what you make plus some. You’ll never be able to save for the future if you don’t reduce your lifestyle costs.

How to Get Back on Track

The first step to tackling this problem is to create a budget. Financial Best Life always offers a free Budget Worksheet & Template. 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?

Challenge yourself to cut back, and 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 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.

#3 – Do You Drive a New Car?

There is nothing wrong with wanting a fancy new set of wheels. After all, if you want it and can afford it then go for it. Just be really honest with yourself about the being able to afford it part. Most of us spend way more on our vehicles than we should, and it can be a huge drain on your budget leaving little room to save for long-term financial goals.

Here’s an interesting fact, 61% of wealthy Americans (defined by the IRS as earning $250,000 or more per year) don’t drive luxury cars and instead prefer Toyotas, Hondas, and Fords.

Related: How to Save for a Car without Blowing Your Budget , “I Live a Car Free Lifestyle”

How to Get Back on Track

Take a second to picture your car payment suddenly disappearing. Without it, how do you feel about your budget? Now obviously your car payment isn’t going away overnight, but you can start to change your mindset. Realize that a car is less of a status symbol and more of a money suck. The wealthy realize it, which is why the majority don’t buy the luxury cars they could afford.

Once your car is paid off, drive it for a few more years, and next time consider buying something that won’t strain your budget.

#4 – Spend Less, Save More

When it comes to reaching your long-term financial goals being able to spend less and save more is key. While it sounds simple, of course, it’s not. After all, has any long-term goal that you’ve achieved been simple?

If you can commit to avoiding new credit card debt, set up automatic transfers to your savings account, and avoid blowing your budget on big items like a new car then you’ll be well on your way to achieving your financial best life!


Starting from scratch or simply in need of a financial re-boot? Click here to enroll in Financial Best Life's FREE 7-Day Money Cleanse!


*LB Note: This piece was first published in September 2013. It's been lovingly updated in 2018.


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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  • giulia
    March 16, 2018 at 5:11 am

    When you have goal to achieve is a little bit easier keep yourself focused on them, for example I’m into savings mood for holiday (I’m craving for a cruise in Greece) and save for a hoome deposit, this means have a budget and stick it and I must to admit I love to prove to my friends that is possible have a good social life also on a tiny budget:D

  • 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.

    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.