Setting Financial Goals Requires a Plan

Choose Your Focus

People tend to have many things they want to achieve. For best success, however, it helps to choose one or two. But how do you decide on a goal? One thing you can do to focus your goal, or goals, is to ask yourself what you’d like to accomplish in the next three years. That could be consistently saving 15 to 20 percent of your income. But saving for what? It could be to save for a new home or build an emergency fund, or something else specific. What matters most is that it matters to you. It should feel like something you want to do, rather than something you should do. This helps to give you the energy to start, persevere and see it to the end. 

Visualize the Outcome

Certainly, saving for something specific makes it easier to resist the temptation to spend the money you should be squirreling away. You’ll also give yourself a head start by visualizing your goal. If the objective is saving for a down payment on a house, for example, envision what that new home will look like. If it’s putting money away for your children’s college tuition, picture your kids in their caps and gowns. Then, put it in writing to make it more real.

Break Your Goal Down into Pieces

If your goal is saving for tuition at a private, four-year college, focusing on the bill of $400,000 in 2030 can be daunting.¹ You can make the task more manageable by breaking it into smaller pieces, with clear benchmarks to meet at each phase. That could mean, for example, determining a monthly contribution that will safely get you to that long-term savings goal over a given time horizon.

Think Through the Obstacles

You’re likely to meet challenges along the way to achieving your objective, whatever that may be. If you’re building an emergency fund, imagine likely obstacles to that goal and anticipate how you might overcome them. For example, maybe you will be tempted to buy a new car, which would divert money from your savings account. By anticipating this stumbling block, you can then come up with a way through the obstacle. In this case, it could be hanging on to your current vehicle for a few more years, or purchasing a used car instead of a new one.

Keep Track of Your Progress

It’s important to stay on top of how you’re doing by keeping track of your progress. Not only does tracking measure how close you are to reaching your goal, it also helps give you a boost when you see how far you’ve come. If you search goal setting in an app store, several highly -rated apps pop up to help keep you on target. You can also use a good old-fashioned journal or spreadsheet. The trick is to use what works for you. 

Talk to a Financial Professional

Many people faced with the challenge of meeting financial goals, especially long-term objectives like retirement, find they need a helping hand. In that case, an advisor can assist in keeping you focused on the right goals, coming up with a realistic plan and helping you stay on track.