Setting Your Financial Goals: 5 Steps


Achieving and setting financial goals can feel overwhelming, but it doesn’t have to be. Before you jump into setting financial goals, you’ll need to determine what a successful financial situation looks like to you.

For some people, success is having a big house, a nice car, and a hefty shopping budget. For others, it might be a more modest lifestyle that prioritizes saving for retirement and paying the bills without stress.

Whatever your financial goals are, make sure you begin setting them by visualizing what you want in your future and then jotting it down. Here are 5 steps to help you plan for financial success—without feeling overwhelmed.  

1. Find Your “Why”

You can’t delve into setting financial goals and preparing for the future if you haven’t found your “why,” or your reasons for setting financial goals in the first place. Having a strong reason behind your goals will be the fuel that motivates you through the tough times so you can stay on track and achieve what you’ve set out to accomplish.

Ask yourself your reason for achieving your financial goals.

Do you want to:

  • Have an emergency fund in case you lose your job, get sick, injured, etc…?
  • Get out of debt so you can purchase things you want or save for retirement?
  • Save for a wedding, vacation, retirement, car, or down-payment on a home?

Giving yourself a reason is essential if you intend to accomplish your financial goals and keep them on track. If you don’t have a reason, any distraction will sidetrack you from saving money in the long run. It’s a lot easier to say “no” to an immediate want like a nice handbag or new pair of shoes when you know there’s something better down the road.

2. Prioritize Your Goals

When setting financial goals, it’s nearly impossible to tackle them all at the same time. Knowing the order in which you want to achieve your goals will help you make better progress than spreading yourself out over several goals at a time. For example, you could spend a year or so paying off debt and forgo saving for a down-payment on a home, or you can spend years and years trying to do both simultaneously.

Not prioritizing your goals leads to frustration and discouragement. Do things in order. Most financial advisors recommend starting with paying off your debt, setting up your emergency fund, and building your retirement fund before you tackle other goals. Once you’ve taken care of the basics, you can start to plan for fun goals like saving for a trip to Thailand or buying a house or car.

3. Set Measurable Goals

Setting financial goals is great, but in order for goal setting to be effective, goals need to be measurable. One popular way of setting goals is to set “SMART” goals. “SMART” goals is an acronym for:

  • Specific
  • Measurable
  • Achievable
  • Realistic
  • Time-Bound

For example, if you were going to set “SMART” goals for a trip, you would need to choose a specific location, decide when you would like to go, and assess whether this goal is achievable on your timeline and with your income, expenses, savings, etc. If your goal seems unrealistic, evaluate what you can do to put your goal within reach such as increasing your income or adjusting your timeline. Finally, set a deadline for your trip so you will have a goal to work toward.


4. Write Down Your Financial Goals

Now that you know what financial goals you want to achieve and what order you will take them on, WRITE THEM DOWN! Be specific and write your goals on a worksheet, notepad, computer, sticky note—anywhere you’ll see them regularly. A recent study from Dominican University in California compiled data from 267 people and grouped them based on whether they wrote down their goals or not. The study found that those who wrote down their goals were 42% more likely to achieve them than those who did not. Don’t underestimate the power of specific, written goals for achieving financial success.

5. Stay on Track

Now that you have a plan, you’ll want to make sure you stick to it. Regularly following up with your progress will help you make changes as necessary and keep you on track so you’re well on your way toward meeting your goals. Setting financial goals is not a one-time event. Life has its ups and downs, and so do your finances, whether it’s a job change, promotion, or even job loss. When these changes occur, make sure you take the time to review your progress and make adjustments so you can stay on track.

When you finally do reach a financial goal and check it off your list, take a moment to reward yourself! It’s important to celebrate your victories and be proud of the progress and accomplishments you’ve made. Then get started on your next goal. It’s hard work, but the reward of success from setting financial goals is well worth the effort.