How to Set Financial Goals
Learning how to set and reach financial your financial goals can help you to pivot your mindset when it comes to money. Accomplishing short term, mid term, and long term goals not only can boost your confidence but they can help you to reach new heights in your career, personal life, and relationships.
Today’s post is in collaboration with Victoria from VKO Financial to shed some light on staying on top of your financial goals for 2021.
2020 has hit us hard in many ways, financially, emotionally and physically.
But let’s move forward and think about ways we can work toward the future we want to achieve.
One thing that we want to help you with is holding yourself accountable to your top 2021 financial goals.
Table of contents:
Related Post: How to create SMART goals
Related Post: Paying yourself is the key to financial stability
How do you define financial goals? Having this basic definition under your belt can help jump start your personal finance journey.
Financial Goal Definition
The desire to have something related to the saving, spending, or investing of money.
Financial goals are personal to each and everyone of us. Goal setting can go as far as creating a financial plan while in your 20's or for retirement.
Either way, it’s a financial goal that one sets for oneself depending on where they want to be in life.
You can create short-term, mid-term or long-term goals.
Who benefits from financial planning?
Anyone can benefit from financial planning, it’s a matter of taking control of your finances at the end of the day.
It’s never too late to set yourself up for success, the earlier the better.
Regrets happen when we look back on things we could have done at a certain age.
However, by beginning your path to retirement, saving, or learning about investing now it will result in the lifestyle that you desire.
Let’s now explore why financial goals are essential for everyone from college students to busy adults.
Why are financial goals important:
Financial goals help you to live a well balanced life.
Determining long term and short term goals are what make it easier to plan for the future.
When you begin to determine what financial goals you would like to accomplish, you begin to figure out what steps can lead to your financial stability.
They also place more control in your hands over your finances.
Majority of people feel that learning financial literacy is difficult or impossible for a beginner, but in reality you only need to build a solid foundation and a willingness to learn.
Creating good financial goals will assist you with building confidence and taking control of your personal finances.
The one thing that truly stands in the way of accomplishing what feels impossible would be the lack of belief in oneself.
How can you make your financial goals useful (successful)
Make your goals SMART.
I have an entire post you can read on what SMART goals are and other examples you can use to make every goal you have more reachable.
What is a SMART goal?
Below is an example of a SMART goal. Allow the goal you make to be specific, measurable, attainable, realistic, and timely.
Specific -I want to increase my income by $100 a month
Measurable- I will work an extra 7 hours per month since I get paid $15 an hour.
Attainable - I’ll stay an hour later two times a week and work an extra shift. I don’t have any commitments that will prevent me from completing this goal.
Realistic - I will work an extra shift at the end of each month because I can make time.
This is something I can do because I don’t have classes during these months and my job will allow me to work extra hours for the summer.
Timely- I will do this from June- to the end of August.
Good examples of financial goals
#1 Make (and stick to) a budget or monthly plan
Once you know where the majority of your money goes, you can determine if you have a problem with how much money you are bringing in or how much you are spending.
Check out my current favorite budgeting system: The no budget- budget
#2 Set a realistic savings goal
The amount you save is just one half of your money saving journey.
The other half of it is determining the reason why you are saving money.
As a young adult usually your highest priority once you decide to go to college or choose a career path would be
to move out and claim independence
buy a car
start saving for retirement
find a few flashy stocks to consider investing in
but wanting to think larger and more long term to include investing in stocks or opening a studio can help add a purpose to your lifestyle as well.
Having a why motivates you for when you’re tempted to indulge in retail therapy or stay in circumstances that make you unhappy.
#3 Create a high yield savings account (HYSA)
Earn interest while you store your money in a safe location.
I’ve used CHASE before and after going on a year with my account I officially earned $0.01.
Yup, one penny.
When it comes to saving online you want to choose an account that has an affordable minimum amount you can deposit, no hidden fees, and an interest rate that is suitable.
Bank Rate does an amazing job at breaking down a few different types of high yield savings account you could open today.
#4 Open up a 401K or Roth IRA, (the equivalent in Canada would be a TFSA or RRSP)
What age should you start saving for retirement?
Research states the best age to start saving for retirement is 25. The earlier you begin saving the more interest that will accumulate.
However, if you’re way past the age of 25, your chance to have a safety net after you hit retirement age is still there.
Once you learn what the best account option is for you, how much you want to have for retirement, and what percentage of your income you have to save... you can understand what your path to financial freedom will look like.
Chris Hogan explains the difference between a Roth IRA and 401K and answers a few questions you may have in the process as well.
Your financial goals are a personal journey that you choose to take. If opening a high yield savings account feels important to you then you go for it.
If you want to keep your desire to retire early to yourself so that you don’t have to worry about outside commentary or opinions, that is perfectly acceptable.
There isn’t a right way to set financial goals, you simply need a plan and determination. And most importantly you are never too late.
Huge shout out to @VKOFinancial for helping me create this post and you can find her on Instagram spreading financial knowledge.
We hope this post has provided some guidance in starting your 2021 financial goals. You can grow your mind and your wallet one step at a time.
Remember this is just the start, and the most important takeaway is to continue to learn from your mistakes.
One last final tip is to review your goals once a month
Scroll to receive your own self care/ financial goal setting freebie.
Let us know in the comments what some of your financial goals are
You may also enjoy: 4 Habits To Become an Expert Saver