Financial goals, we all need them, both short term and long term. How to set financial goals and achieve them is a very important part of your financial life. Financial goals can help you reach other goals in your life, such as early retirement or extended travel, or just not having to worry about money.
Why Set Financial Goals?
You need to know your why. Why are you setting financial goals? Are you saving for a house? A car? A vacation? Paying off debt? Want to retire early? Help your kids with college expenses? Do you want to make sure your family is taken care of in case of an emergency? Establishing the why will make the goals easier to achieve. Why do you want to set financial goals?
You need to make sure that you have both short and long term financial goals. Reaching your short term goals will help keep your focus on your long term goals. Small wins lead to big wins. Goal setting will almost guarantee your success in life, both personally and financially.
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How to Set Financial Goals and Achieve Them
If you do not have a small emergency fund, establish this first. You need at least $1000 – $1500 in a “baby” emergency fund. Why? Because Murphy inevitably comes knocking when you are trying to reach big financial goals. Having a little bit tucked away can really help when the oven stops working or you need to cover a deductible for a car accident.
Once all of your consumer debt is paid off, then it’s time to establish at least a 3 – 6 month emergency fund.
Improve Credit Score
You should be monitoring your credit report monthly since identity theft is so prevalent right now. I use Credit Sesame and receive alerts by email whenever anything changes on my credit report. Credit Sesame will also give you suggestions on how you can improve your credit score. Having a higher credit score can lead to lower interest rates and lower insurance rates and can even have an effect on job offers, among many other benefits.
Create a budget/spending plan
Knowing how much you are spending is important so you can reach your other financial goals. Trimming the budget here and there can help you pay off debt quicker, establish your emergency fund and in turn help create wealth. Once I was able to understand my money better and where it was all going, I was able to better plan out my long term financial goals.
If you are not financially independent and you don’t have a couple hundred thousand in the bank, you need life insurance. Making sure that your family will be taken care of in case of a tragedy should be one of your highest priorities. Be sure to shop around and get the best price for what you need. If you have life insurance through your employer, you need a separate policy. You could lose your job tomorrow and that work policy would be gone. Protect your family.
Do you want to build an investment account for retirement/financial independence? This is definitely a long term goal. You have to ride out the ups and downs and keep that end goal in mind. Just keep plugging away and putting that money away, and you will get there. Find a good financial advisor that you trust and can rely on to help you build wealth through your investments.
Do you have a retirement strategy? Have you met with a retirement planner? You can start planning our your retirement at any age. You can set a date/year that you want to retire or not, that is up to you. Knowing how you are going to get there is what is most important at this point. Max out those 401k’s and IRA’s if you can. Is your goal to retire early? Nowadays, that means so many things to so many different people. Whether you want to retire at 40 or 65, you need to have a plan to get there.
Pay off Debt
If you have any consumer debt, such as credit card debt or vehicle debt, or even if you only have mortgage debt, you really need to create a plan to pay that off. Creating a debt pay off plan can really help you obtain long term goals even quicker. Having no debt will give you such peace of mind and clarity. You will be able to focus on your long term goals so much better once your debt is gone and out of the way.
Something you should do every 6 months is go over your bills, such as Netflix or internet or a music subscription and think about it. Do you really need that? Are you really watching or listening enough to justify that expense? If not, cancel it! If the service is something that you cannot live without, try and negotiate the cost with the provider. You never know! While you are setting up your budget/spending plan, take a deep dive into some expenses and see if you can cut them or even eliminate them. Call the cable/internet company and ask for a special rate, for example.
There are so many great side hustles that can fit in anyone’s life. Whether you want to work in a bookstore on the weekends or an ice cream shop or become a VA online or start a blog, the opportunities are endless! Having a little extra money every month can not only provide a little extra breathing room, but you could have extra money to pay off debt, save or invest.
Read Financial Books
If you need some inspiration to reach your financial goals, pick up a book, or listen to one on audible. I know when I get in a funk about money, I read my favorite, The Richest Man in Babylon. This book always puts money and life in perspective for me. Here is a great list of 10 books that will change your Mindset about Money.
I personally use Kindle Unlimited and absolutely love it!
If one of your goals is to save more money and you just cannot seem to reach that goal, how about automation? Automating your savings every pay period could make the difference. I have transactions set up for every pay period to fund our Christmas sinking fund, among other funds. Use this handy sinking funds spreadsheet to keep track of your savings.
Financial Goal Tracker
To stay on track and achieve your financial goals, use this financial goal tracker to not only keep track of your financial goals, but to monitor and re-evaluate if necessary. Look at them every month, every 6 months, every year. Talk to your partner (if applicable) and make sure that you are on the same page.
What are your financial goals? Let me know in the comments and if you want some accountability, join the My Journey Along the Way Facebook Group.