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Setting Your Financial Goals

Practical Ways To Achieve Your Financial Goals

On the surface, setting financial goals seems pretty simple: “I need to buy a house in a couple of years” or “I’d like to retire comfortably” or “I want to put my kids through college”…etc.  The challenge however, is setting realistic, achievable goals. Setting your goals impossibly high will only set you up for failure and disappointment. The following is a list of easy ways to help you succeed at achieve your goals:

Plan for the Worst, Work for the Best

Short of winning the lottery or falling into a pool of money (or stealing someone else’s) setting a retirement goal of five million dollars in the next three years while currently earning $35,000 is simply not realistic. And that’s OK. Just be sure to start thinking in relative terms – what can you realistically save over the course of a year without over-taxing yourself. Don’t assume you’ll get the raise you deserve; plan for the worst but work hard for the best.

Separate your goals into blocks of time

Separate your goals into short-term, medium-term and long-term blocks. By doing this, you’ll create a clear path for yourself that helps keep you in check every step of the way.

  1. Your long-term goal is to have children and buy a house in approximately 5-10 years. For that you estimate you will need $40,000.
  2. In the meantime, your medium term goal is to buy a condo with a $15,000 deposit. The plan is to sell the condo after three years and to use any profit from the sale as part of the down payment for the house.
  3. The short-term goal will be to earn $15,000 in about two years. You need to start saving at least $625/month, through either earnings or other sources of income.

As you can see, your short-term goals need to include specific steps in order to help you reach those longer ones.

Quantify everything and set a date.

Your goals should be as focused and specific as possible. Rather than wishing for a “nice car in the next few years” say “I want to buy a $40,000 car in 3 years”. This will make calculating goals and analyzing your progress much simpler. Follow that rule and you’ll set yourself up for success rather than failure.

Don’t forget what you owe

When talking about the future, it’s easy to forget about the past. Those credit card debts and personal loans don’t care about your goals – they’re not going anywhere. Factor them in when deciding what you want from your financial future. In fact, before you come up with any other financial goals, your primary one must be to get rid of your present debt. There is no point in earning 7% on your investments if you are paying 21% towards your debt every month. That’s a losing proposition.

And finally, the golden rule: Don’t lose sight of your goal

Jotting things down on paper (or electronically, who uses paper these days anyways?) is one thing – living them takes commitment, and possibly a few sacrifices. Re-visit your goals often to strengthen your resolve. Don’t ever underestimate the short-term $100 or $500 goals, that will ultimately lead up to the thousands and (fingers crossed) million dollar goals. So, to recap, follow the steps below to create and meet your financial goals:

Five steps to creating and meeting your financial goals

  1. Set your goals:  Write down your financial goal(s) as clearly as possible. Use amounts and dates. Ex. “I will save $10,000 by April 2014.
  2. Start tracking: Use an excel sheet or a online tool like or Quicken to plan out your income and expenses
  3. Define how much you can save: Using one of those tools, find out exactly how much you can realistically afford to save
  4. But, Don’t forget your debts: Don’t forget to include any and all debts in your calculations. Getting out of debt is critical to your financial future.
  5. Review and readjust: Get in the habit of reviewing your finances at the end of every month. How much closer or farther are you from  your goals.
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