How to Set Effective Financial Goals


Setting financial goals isn’t just about making more money or saving more. It’s also about working towards a financial future that will meet your needs and fulfill you. Mapping out your finances is about taking control of your whole life and getting to where you want to be, personally, professionally, and economically.

If you’re unsure of how to begin with setting financial goals that will stick, here are a few tips to get you started.

Figure Out What’s Important to You

What are you willing to give up? And more importantly, what aren’t you?

Before you set financial goals, you have to dig deep and figure out what really matters to you. If travel comes before home ownership, that will affect the goals you should set. Or, maybe you don’t mind living paycheck-to-paycheck as long as you pay off your debts in a timely manner. Maybe that daily cup of coffee is an extra perk you don’t need, or maybe you’re not willing to make that sacrifice and you’d rather pinch pennies elsewhere.

Start by brainstorming a few overall life goals you’d like to accomplish in the coming years: education, starting a family, or traveling the world, for example. Then, translate those into broad financial goals before setting out specific short- and long-term priorities.

Set Both Short-Term and Long-Term Goals

After you’ve figured out what you want, it’s time to decide how you plan to get it. Set attainable, realistic, and specific short- and long-term goals based on the priorities you outlined in the first step.

Short-term goals could include saving an extra $500 next month, for example, or paying every bill on time for the next three months. They could also involve a smaller debt that you’d like to pay off within a certain allotted period of time.

Long-term goals are more sweeping: paying off your student loans, or improving your credit score significantly, for example. After you set your long-term goals, create a step-by-step plan to get there, with measurable outcomes along the way that you can keep track of.

Be Specific

Whenever you can, associate an amount or a quantitative possible outcome with each of your financial goals. If you simply write, “Pay off debts,” it’s not going to be helpful to you in the long-run. Instead, each goal should specify which debt you’d like to pay off and in a given time frame. It should also include steps to help you get there, so that you can keep track of your progress as you seek to shape your financial future.

Leave Room for Error

When creating a budget or crafting financial goals, remember to keep things realistic and attainable. Leave wiggle room each month for unexpected expenses like sudden medical bills or home repairs. If you don’t, you might find yourself needing to play catch-up month after month. Falling into a predictable monetary pattern as often as you can, and allowing for some flexibility and the occasional slip-up from the beginning, will help you stay on track financially time and time again.