How to Envision and Achieve Your Financial Goals

Chances are that if you’re reading this article, you’ve probably been in a situation that has played out in the following manner: You get excited (or determined) about getting your spending under control. You create a budget and have every intention of sticking with it.

And then you give up after a few weeks.

You see, the thing is that budgeting requires making sacrifices that when looked at all at once, can be very discouraging, and can actually seem tedious fairly quickly, especially if you are not seeing the positive results right away. However, executing your financial plan can be successfully done with a solid budgeting strategy, including clear, meaningful small milestones to accompany the overall objectives. Read on to find out how to set (and achieve) your financial goals (finally!).

What Are Financial Goals

Financial Goals are monetary objectives that you need to accomplish or goals that require cash to achieve. Such examples of financial goals could be:

• Saving $1,000 every month
• Making a 6-figure annual salary
• Buying your first home
• Taking your dream vacation

By identifying what it is that you need to purchase, or experience, you can then plan to obtain the cash required for this goal. This money-related target is your financial goal. There are 2 fundamental sorts of Financial goals that you can accomplish:

Short-Term Goals: These are objectives that you can aim to achieve in 2 years or less

Long-Term Goals: These are objectives that require a bit more time and planning to achieve. This usually takes longer than 2 years and could be a goal for 40, or even 50 years from now.

Making sure you achieve your financial goals

To ensure you are able to achieve your financial goals, you have to first understand yourself, mainly your reason for doing this in the first place, as well as getting a firm grasp on your current financial situation.

Why is this a Goal?

Before you go around writing down “buy my favorite car” as a financial goal, let’s pause and take a deep breath because if you don’t properly define and plan your goals and why you are setting them, you’re likely to get yourself into debt, which is the last place you want to be. This will help with prioritization and goal setting so that your future self won’t suffer due to the decisions that you make today.

So take some time to really think about your future. You might ask yourself questions like

• What would you like to have?
• What would you like to experience?
• Who would you like to share it with?
• Where would you like to live?

This could lead to setting goals like:

• Build an emergency fund
• Paying off a credit card
• Taking your dream family vacation
• Retiring comfortably

Remember, your goals don’t have to be overly grand or complicated. It just needs to hold importance to you. And if it is that important, chances are that you will prioritize it. At the end of the day, WHY you want to set these goals is just as important (if not more important), than WHAT the goals are.

What is your Current Financial Health?

If you don’t know who you are now, you won’t know what to do to become who you want to be. You can’t properly determine your financial goals if you don’t know how much money you currently have, or what your spending habits are.

If you don’t know what your income and your expenses are, it can be easy for you to get into more debt which will be a setback for your financial goals. So it is prudent to take a good, hard look at your current financial health, that is, figure out what your expenses are, how much open debt you have, how much emergency funds you have saved, and how much over — or under — your budget you are on a monthly basis. If you don’t have a budget, don’t fret. We got you covered. Here’s how to start.

In the end, your financial health boils down to this

1. Create a Budget
2. Calculate the value of your assets and the money you have. This includes savings, IRAs, 401ks, and paid-off assets like your house, or car. The total value will be your Assets (A)
3. Calculate any open debts you have. This includes credit cards, student loans, and mortgage payments. The sum of this is your Debts (D)
4. Take the total amount in step 3 and subtract it from the amount calculated in Step 2, hence:

If you arrive at a positive value, then great. You’re doing well for yourself. If you have a negative value…don’t worry, the majority of people are in the same situation as you, and this can be fixed. This is where financial goal setting comes into play. Keep reading

Setting Your Financial Goals

Now that you have established your “why” and are aware of your financial health, it is time to take actionable steps toward achieving each of your goals. Keep in mind that these need to be practical steps, as the amount of effort, time, and money required will depend on your current income, expenses, and overall financial health as we previously discussed. A common goal-setting method that can be applied here is the S.M.A.R.T. framework. This is an acronym that stands for

• Specific: Specify the area of improvement
• Measurable: Be quantifiable, which will help measure your progress
• Attainable: Must be practical
• Relevant: Actions taken should relate to your goal
• Time-Related: Specify when the result(s) can be achieved

Example – Using the SMART Method

Let’s put it into practice. For example, let’s say your goal was to start saving for investment. If you applied the SMART goal method, here is what your goal would look like:

• Specific: For the next 12 months, I will save 10% of every paycheck, which is between $150-$180
• Measurable: My bank will automatically transfer 10% and deposit it into another savings account that has been set up for this purpose, so progress can be easily tracked
• Attainable: Within the next 12 months, I will accumulate at least $3,600
• Relevant: By saving 10% and generating $3,600 of savings, I can use this towards my investment next year
• Time-bound: My goal is to set aside 10% of my savings and invest it next year

By using the SMART method, you create a plan that will actually put you on track to completing your goal, rather than just saying “I want to start saving.” Be sure to create your SMART goals, and write them down somewhere that you can see them every day. Track your progress, and set mini milestones for yourself so you can celebrate when you hit those milestones.

Mark This Down: The Bottom Line

Setting your financial goals can seem tedious and daunting when you first embark on this journey. But remember why you are doing this, which is to create a better future for yourself. Your ability to reach your goal will be determined by the decisions that you make each day. Every right decision and every successful step will bring you that much closer to making your goal a reality. And by setting mini-milestones along the way, you are able to celebrate the small wins while bringing you closer to the big win. And this will make you go from goal-setter to goal-winner.