How to set financial goals that stick
Making financial goals can be challenging. To be successful, you need a process for setting goals. Let’s take a look at how to make strong financial goals so you can get the New Year started right.
Break away and get serious
Take a moment to break away from all the noise when setting goals. Remove all distractions and take time to answer a few tough but critical questions.
What is worrying you the most right now, and how can setting a financial goal help?
What would you like to improve about your current financial situation?
What do you want your finances to look like at this time next year? In five years?
What are some fun things you like to do in the next year?
What are some things you’d like to accomplish in the next five to ten years?
Be honest and open. If you have too much debt, embrace the problem. You aren’t alone, and it won’t go away without a plan.
If you’d like to take a dream vacation, embrace that too. A good financial goal will help you get there.
Nothing is off the table. Write it all down
Look at the answers to your questions and take care of the most pressing concerns first. Things like debt and expensive repairs have to be addressed to start making progress on bigger dreams.
For now, just write the problem, don’t set the goal.
Now, take the same approach with things you can control. Career plans, education, and dream vacations should all be jotted down. Like before, don’t set the goal yet. Just write down what you want to accomplish.
Write the goals and make a plan
Okay, you have pressing concerns and big plans on paper. It’s time to make some S.M.A.R.T. goals. Each goal will be Specific, Measurable, Achievable, Relevant, and Time-bound.
Your most problematic issues, like debt, will be your short-term goals because you’ll need them out of the way to achieve your long-term goals.
A S.M.A.R.T short-term goal might be something like this:
“I will pay off and cut up two credit cards with the lowest balances by the end of July this year.”
This goal says exactly what you’ll do, how much you’ll do, and sets a deadline. It’s achievable, so you don’t get overwhelmed, and it is relevant.
Goals like this are much more like to be achieved than something ambiguous like, “I want to get rid of some debt soon.”
After completing your short-term goals, move into the long-term goals like career moves and dream vacations. Again, keep using the S.M.A.R.T. goal structure, but keep in mind hour timeline is longer, so you can think bigger.
Let’s say you want to get your college degree, but you have small children at home, and you are working. A long-term S.M.A.R.T. goal may read something like this:
“I will get my bachelor’s degree in accounting by 2026.”
Once you have the goals written, share them with someone you trust. It will help with accountability. You’ll also want some helpful resources like these financial goal worksheets.
Of course, there will be setbacks. So, be flexible and don’t be afraid to adjust goals as necessary. But, whatever you do, don’t give up, and you’ll accomplish more than you thought possible.
Happy goal setting, and here’s to a great New Year!