Setting and Achieving Financial Goals

Financial success is not a matter of chance; it’s a result of setting and pursuing well-defined financial goals. Whether you aspire to enjoy a comfortable retirement, become debt-free or travel the world, financial goals provide the roadmap to turn your dreams into reality.

What Are Financial Goals? 

Financial goals are the specific money-related targets you set for yourself. Each one is tied to a different aspect of your financial life. They range from short-term goals that address your immediate needs and desires to long-term dreams of what you want your financial future to look like.

Financial goals are not one-size-fits-all. They come in three distinct time frames: short-term (less than three years), mid-term (three to 10 years) and long-term (more than 10 years). Each type plays a unique role in your financial journey.

Financial Goal Time Frames

Short-Term

These relate to immediate desires or needs, such as home improvements, dream vacations or emergency funds. Giving them specific and exciting names can boost motivation.

Mid-Term

Mid-term or intermediate goals bridge the gap between short-term and long-term objectives. Examples include improving your credit score and obtaining capital to start your own business. They typically have a time frame of three to 10 years and are stepping stones to larger goals.

Long-Term

These include more distant objectives like securing a comfortable retirement or funding your grandchildren’s education. Breaking down long-term goals into smaller, short-term or mid-term milestones ensures steady progress.

Your financial goals should align with your values and vision for the future. As you set them, visualize the life you want to lead and how these goals fit into that picture.

In my time as a financial planner and financial coach, I’ve had the privilege of working with clients from diverse backgrounds, spanning various socioeconomic levels, relationships with money, neuro variances and cultural perspectives. What I’ve consistently observed is that when it comes to matters of finance, there’s always going to be something on the goals list to address. 

While the grand, long-term goals are critical, especially for securing one’s financial future, it’s equally vital to navigate immediate needs and desires or external factors like evolving legislation that can impact one’s financial landscape.

My clients and I embark on a journey to break down these ambitious aspirations into manageable, actionable steps. This approach not only reduces the overwhelming nature of financial planning but also empowers individuals to regain control and confidence in their financial decisions. 

By addressing both the macro and micro aspects of financial goals, my clients find the motivation and focus they need to achieve their dreams.

Well-crafted financial goals are detailed and SMART:

• Specific: Goals should be clear and well-defined.
• Measurable: What does progress look like? Examples of measurements include dollars, units or occurrences.
• Attainable: Goals should be realistic. Do you have the resources necessary to achieve this goal, such as time, skill and financial capacity? Stretch goals are okay, but they shouldn’t be out of reach.
• Relevant: Will this goal help you accomplish your overarching objective? Is this truly your goal or someone else’s?
• Time-bound: When do you want to achieve this goal?

Start with broad goals and then make SMART goals for them. Consider the steps involved on the path to achieving these goals and use these as the basis.

SMART goals provide clarity and focus, significantly enhancing your chances of success.

Establishing goals are essential for improving your financial position and accumulating wealth. I recommend quantifying your goals whenever possible. For example, instead of endeavoring to “save more money in 2024,” commit to “save 10% more money in 2024 than in 2023.” Instead of striving to “learn more about investing,” commit to “read one educational investment article or blogpost per week.”

Thomas J. Brock, CFA®, CPAInvestment, Corporate Finance and Accounting Professional

Thomas Brock, CFA®, CPA, is a financial professional with over 20 years of experience in investments, corporate finance and accounting. He currently oversees the investment operation for a $4 billion super-regional insurance carrier.

Your Financial Goals and Your Budget Go Hand-in-Hand

Creating a realistic budget is a pivotal step in the journey to achieving your financial goals. Your budget serves as a financial GPS, helping you maintain financial discipline and steer towards your desired destinations. It provides a clear view of your income, expenses and savings, allowing you to make informed financial decisions.

Furthermore, a budget acts as a communication tool, especially in family finances. It can bridge the gap between differing spending habits and priorities among family members. By presenting concrete data, you can illustrate the impact of financial choices on everyone’s goals, fostering better financial harmony.

Benefits of Setting Financial Goals

Financial goals are the compass for your financial journey. When you achieve them, you’re one step closer to making your financial dreams come true. Think of financial goals as the heart of your financial plan. They guide your financial decisions, keep you on track and lead you toward a more secure and prosperous future. 

Concrete, written goals are easier to track and measure, keeping you motivated. Regularly reviewing your goals, budget and financial priorities enhances your financial control and reduces stress. It also helps you make informed decisions, ensuring your choices align with your objectives.

A survey from October 2022 conducted by the American Psychological Association revealed that finances were at the top of the list of stressors for Americans.

Regarding personal stressors, the report stated that “inflation is a source of stress for 83% of U.S. adults.” Of those who indicated money as a significant source of stress, 43% reported saving money for the future as their main source.

In August 2023, the Federal Reserve Bank of New York reported that Americans’ total credit card debt reached a record high of $1.03 trillion in the second quarter of 2023.

Facing your financial reality head-on, setting clear goals and sticking to them can help alleviate this stress and provide a sense of direction and financial security.

Tips for Setting Achievable Financial Goals

While goal setting is a pivotal step in achieving financial success, I’ve often seen individuals encounter common pitfalls that hinder their progress. Beyond the importance of SMART goals, there are three fundamental stumbling blocks I’ve observed time and again. In recognizing and navigating these common challenges, you can pave the way toward a more secure and prosperous financial future.

Common Pitfalls

Being in a Rush

Achieving financial goals is more akin to a marathon than a sprint. Attempting drastic, overnight transformations can lead to being overwhelmed, frustrated, and ultimately, unsuccessful in achieving your goals. In a world conditioned for quick results, it’s essential to embrace patience and focus on gradual, sustainable changes.

Readiness for Change

Honesty with oneself is a crucial aspect of goal setting. While we may have big dreams, they must align with our current mental, physical and financial readiness. It’s common to aspire to great heights, but it’s equally vital to ensure that these aspirations are realistic within your present circumstances.

Not Knowing Your “Why”

Many people set goals without pausing to reflect on their underlying motivations. It’s crucial to ask yourself, “why am I pursuing this goal?” What is the driving force behind your financial aspirations? Is it to leave a lasting legacy for your family or to alleviate the stress that stems from financial instability? Identifying your “why” and aligning your goals with your core values can provide the necessary clarity and motivation to stay the course.

As Dr. Brad Klontz suggested in his article for CNBC’s “Invest in You: Ready. Set. Grow.” column, it’s hard to get motivated toward your financial goals if you don’t link them to the things you’re most passionate about.

Dr. Klontz’s tips for using financial psychology to achieve your goals:

• Visualize your ideal life and identify financial goals that align with this picture
• Give your goals names that conjure excitement and motivation
• Time-stamp your goals (a tenet of SMART goals)
• Create visual representations to help you picture your goals
• Automate your success

This last tip can have a huge impact. Automating as many actions involved in progressing toward your financial goals as possible can mitigate the perception that you’re doing without — or doing with less.

Fortunately, there are a plethora of resources available to automate and track your financial goals.

Read More: How To Get Your Finances in Order

Resources for Setting and Reaching Financial Goals

Once you’ve set goals, you must track your progress. Numerous resources can help you set and reach your financial goals, catering to various needs and preferences:

• Budgeting Tools: Utilize platforms like You Need A Budget (YNAB), Mint or Quicken to create and manage your budget.
• Automated Saving: Apps like Acorns, Chime and Digit can help you save automatically.
• Online Banking Tools: Many banks offer online tools and reports to monitor your transactions and accounts.
• Financial Calculators: Access free calculators and credit counseling services from nonprofits like the National Foundation for Credit Counseling.
• Government Resources: Government websites like MyMoney.gov provide financial literacy education and guidance.

Remember, automation can be a powerful ally in reaching your financial goals. By automating key actions, you’ll make progress without constant effort.

In addition to the valuable tool of automation, establishing various forms of accountability is paramount on your journey toward achieving your financial goals. Consider finding an accountability partner, someone who shares your financial aspirations and can offer encouragement and motivation along the way. This partner can act as a source of inspiration when the going gets tough and can celebrate your successes with you. Social support can also be a vital resource, especially if you find that sharing your financial goals with friends or family helps keep you on track.

It’s essential to acknowledge that despite your best efforts, not everything will unfold exactly as planned. Life is full of unexpected twists and turns, and financial journeys are no exception. When faced with setbacks or unforeseen challenges, remember to roll with the punches. Adaptability is a key attribute of successful goal achievers. Instead of dwelling on what didn’t go as anticipated, focus on how you can adjust your approach and move forward.

Practice self-compassion throughout your financial journey. Be kind to yourself, especially when you encounter obstacles. Avoid self-criticism and instead offer understanding and patience. Treat yourself with the same empathy you would extend to a close friend facing a similar situation. 

Lastly, when you do reach your financial milestones and achieve your goals, take a moment to celebrate your accomplishments. Rewarding yourself for your dedication and hard work can provide a well-deserved sense of achievement and motivation for future financial endeavors. Remember, success in financial goal setting isn’t just about reaching the destination; it’s also about appreciating the journey and recognizing your growth along the way. So, go ahead and treat yourself – you’ve earned it!

Frequently Asked Questions About Financial Goals

Editor Bianca Dagostino contributed to this article.