Financial Goals: The Importance of Setting Them & 3 Steps to Get You Started

By Sara

-

Last Updated: June 4, 2022

Share

816
0

Setting goals and sticking to them can be challenging, but it is important to give yourself something to work towards. We set fitness goals, educational goals, and even career goals. Many times we forget to set financial goals. Setting financial goals is important to ensure you are reaching certain goals you have. Setting a goal around money may be scary, but there are three steps to make sure you are setting yourself up for success. 

Setting a financial goal or goals will give you the motivation to work towards the thing that you want to achieve. You can decide to write down your goal, make a vision board, or even share it on social media.

 

Step 1 - Pick a Goal 

The first step to setting a financial goal is picking your goal. The goal that you choose must be specific. The more specific your goal is, the easier the next steps are, and the more likely you are to reach your goal. If your goal is too vague, you may never move past this step because you haven’t giveny ourself something specific to focus on. 

For example, a goal of saving money over the summer is a vague goal. However, this vague goal is a great place to start. Be more clear in this goal. Do you want to cut back your costs during the summer? Do you want to save up for a new computer for the school year? Do you want to take a road trip before the summer is over? Ask yourself why you want to save money as your goal and write that down.

 

Step 2 - Set an Action Plan 

Once you have your specific goal, the next step is to set an action plan to achieve this goal. A specific goal is just the first step, but having an action plan is how you will reach your goal. To start your action plan, set a timeframe for yourself. How long do you plan this goal to take for you to reach? A goal with no timeframe is just as bad as a vague goal. 

Our current goal is to save money over the summer to save up for a computer for the upcoming school year. With this specific goal, we know how much we have to save. A Macbook Air is about $1,000. Our goal is to save up this amount from June to August. This gives us three months to save $1,000, which is about $333 every month. If you know your current savings rate, then you may know more specifically if this goal is attainable or not. If you don’t know your current savings rate, it is still okay to set this goal! If you don’t reach this goal by August, an extra month will not hurt anyone. 

 

Step 3 - Measure How to Reach Your Goal

The last step towards making a financial goal is deciding how you want to measure this goal. By having a specific goal and action plan, you will be able to decide on this last step very quickly. If you are a visual person, you may decide to start a bullet journal and color in every $100 saved towards your goal. You may be more tech-savvy and create an excel spreadsheet to track your savings. There are even apps on your phone to help you measure your status. 

Measuring your process will give you a good feeling to see that you are taking steps toward your goal. The closer you get to reaching your goal the more excited you should be. This may motivate you to save even more. 

 

How to Pick a Financial Goal? 

If you are ready to start following these three steps toward reaching your financial goal, you may need some extra time to pick a financial goal to focus on. This is the most challenging part of the entire process. There are ten financial goals that everyone should plan for, like education, housing, becoming debt-free, and emergency funds. Depending on where you are in life will dictate what type of financial goal to have. 

If you are still in college, your goal may be to save up for a phone, a study abroad trip, or a summer concert with your friends. If you are a new graduate, your goals may be to save up for new apartment furniture, down payments towards a car, or a plane ticket to see family. If you are a newlywed or starting a family, your goals may be to save up for a home, buy a family car, or start a college fund for your child. As you progress in life, your financial goals will change. Whatever goal you have, follow the three steps to create successful goals that you can achieve. 

 

Wrap Up 

Financial goals are important to make sure you are reaching your potential in life. A goal must be specific, have an action plan, and be measurable to be successful. Goals are easy to break, but making a plan for one will allow to you reach your goal and set new goals. 

Photo by Engin Akyurt

YOU MIGHT ALSO LIKE

Leave a Reply

Your email address will not be published.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

LATEST

Subscribe for daily financial content

Daily articles, financial messages and affirmations to best help you navigate your financial future.