How Can Setting Goals Help You Manage Your Money?

10 Min Read | Apr 25, 2022

Practice y'all ever feel like you're tryingthen hard, only you're but not making progress with your money? Or like you've been working your barrel off, only when you expect around, you never have much to show for it?

Here'southward the thing: If you don't set goals for your money, you lot'll probably go along feeling like all y'all're doing is spinning those wheels. If you want to finally become moving, it's time to brand some fiscal goals.

What Are Financial Goals?

A financial goal is whatsoever plan you have for your money. You lot can have brusk-term and long-term goals. For example, saving up $i,000 is a short-term goal, while investing for retirement is a long-term financial goal. Your goals should requite you focus and keep you answerable, no matter how long they take to make happen!

5 Steps to Setting Financial Goals

ane. Write them down.

Something special happens when you put a pen to paper and write down your goals. Y'all're more than probable to actually achieve them besides.

Get a FREE customized plan for your money in iii minutes!

So, go ahead—make the commitment to yourself by putting them in writing. Then, stick them in your machine, to your desk, or on your bathroom mirror. Type them in the Notes app on your telephone, take a screenshot, and put information technology as your wallpaper so you lot see it all the time! Keeping your goals where yous can come across them will keep you lot focused.

2. Make them specific.

Don't only say, "I desire to be better with coin." That'southward too vague. Narrow information technology down!

Let'south create an example here. What if yous determine to tackle your debt—specifically. That'southward one area of money to focus on. In the next two steps, you'll break this downwardly even more!

3. Make them measurable.

Okay, so you lot desire to pay off debt. Now information technology's time to option an amount, something you tin can mensurate to know if you striking the goal or not. You look at your upkeep and your debt and decide you want to pay $15,000 toward your debt. That's a measurable goal!

four. Give yourself a deadline.

Will y'allalways reallyattain your goals if they aren't time-sensitive? Writer Benny Lewis says, "There are seven days in a week, and 'someday' is non i of them." Stop saying someday. You lot need to give yourself a borderline and brand it reasonable—but also challenging!

Let'south look at our example over again. When do y'all desire to hit your goal? If you want to pay off $15,000 in one year, that means you take to pay $1,250 a month to practise it. Is this possible merely too a flake of a stretch? Good!

Breaking your goals into seize with teeth-sized chunks will go along you motivated when yous cross each tiny goal off your list, which then keeps yous motivated to hit the big goal in the end!

5. Make sure they're your own goals.

It's easy to look effectually at what other people are doing and experience like yous should be doing it likewise. Simply when we start comparing ourselves to other people, nosotros're playing a game nosotros'll never win.

When you're setting financial goals, brand sure it's the best pick foryou. In other words, just because all your friends are taking out 2nd mortgages for renovated kitchens doesn't mean you should. Put the blinders on, focus on your lane, and cantankerous your ain terminate line.

v Common Financial Goals

Okay, it can be hard to narrow down which financial goals are right for you. Where do you even beginning? Here are some common fiscal goals and tips on how to make them happen.

1. Create and stick to a budget.

Non only is budgeting one of the pinnacle financial goals people set up each new year's day, just it's also the foundation y'all should build all other money goals on.

That'south because a budget is a program for what you lot'll exercise with all your money. It's aplanfor what's coming in (income) and what's going out (expenses). When you do it every calendar month, you're giving your money purpose. You're telling your coin where to go so you don't finish up wondering where it went.

This is how y'all'll gain momentum in every area of your finances. If you're already budgeting, bravo! If not, become started with EveryDollar so you can knock out all your other money goals.

2. Build up an emergency fund.

Life happens. Merely you can exist prepared for any money issues that come your style ifyou lot've got coin saved up. We're talking car problem, medical expenses and busted toilets—y'all know, some of the worst parts of being an adult. But when you've got an emergency fund, y'all tin can remainder well at night knowing yous're able to stand up against these moments.

Start with the financial goal of having $1,000 in savings. Then, if you accept debt, pay it all off (that'southward the next goal I'll talk virtually). Later that, build up a fully funded emergency fund with 3–six months of expenses. (These are the kickoff 3 Baby Steps—the proven plan I teach to assist you take control of your coin.)

When you've got an emergency fund, you're set for those "life happens" moments. Instead of being worried nigh what could happen next, y'all'll be living in conviction.

iii. Get out of debt.

If you've got debt, information technology'south time to get serious about paying it off. All of it. Mind, all debt does is hold you back. You can't get alee with your money if it's always going towards paying off your past.

Retrieve: Every payment you lot brand to debtcouldbe cash you're putting toward your other financial goals instead.

4. Salvage up for your retirement dreams.

Okay, think about those awesome retirement dreams you've got. Do you want to pack up the grandkids and head to Disney every Christmas? Visit a new state with your spouse one time a quarter? Read every book on your shelves? Accept up a dream hobby?

No thing what you lot're dreaming of for the time to come, you'll demand skillful retirement investments now to arrive happen. And then, in one case you lot're debt-free and have that fully funded emergency fund, I desire yous to start saving xv% of your household income for retirement.

5. Spend less and salvage more.

Tons of people throw out the goal of "I want to spend less" or "I want to salvage more" without thinking most what it means to actually practise those things. You've got to get intentional about your money. Budget every month, find deals, use coupons, pay cash. Learn how to say no—even to yourself!

I'm not saying yous'll never have fun. But if you lot want to salvage money, yous need to think style more about what y'all're saying yes to with your coin!

And finally, here's one of my favorite tips for spending less and saving more: Get-go meal planning. Nutrient is where most Americans overspend, and meal planning is how you lot rein that in! Check out my costless Weekly Meal Planner and Grocery Guide to see how.

An Instance of a Financial Goal in Activeness

Okay, allow's get really specific here with a story from my own life. A fiscal goal is what kept my spending tendencies (akaspendencies—trust me, it's a affair) in cheque every bit my husband, Winston, and I built our house final year. Before that, any extra income we brought in went to general savings. Our investments were on rails, and it was fun to come across that money abound. But honestly, it was only there, doing its thing, and leaving me a bit bromidic in my financial goals.

But when we decided to build a house, I knew at that place'd be upcoming dollar amounts and deadlines to encounter. And while saving up that much money seemed nearly impossible, breaking it down into monthly goals gave usa so much momentum. Having a plan for our money not but made our dream possible, but information technology besides made the process fun!

Knowing my money was going toward something that I really wanted fabricated all the divergence. Suddenly I was motivated in a new way and then I could hitting that goal faster. And even though in that location were moments when we felt fatigued—I mean, there were some days when all I wanted to do was to relax and spend money—finding artistic ways to work toward our goal was actually actually fun.

Across that, it was character-edifice. It's a time in our matrimony that we'll e'er be able to look back on and know nosotros accomplished something difficult together. Information technology cultivated connectedness with each other and contentment in my ain center. Now that we've moved, I realize that those benefits of the process are worth more the new house.

Why Is Setting Financial Goals Important?

Having a goal volition change how you lot await at your money. You'll start to see how every determination you make matters to your greater financial health.

For example, if you don't have fiscal goals, information technology's no big deal to buy Starbucks every solar day. But allow'southward look at just how much those lattes are really costing you. You'll typically spend $25 for simply 1 workweek of lattes—that'southward $100 a month! What else could you do with that money?

If you put $100 in an investment account every month for five years, your latte fund could grow into more $8,000 thanks to the power of compound interest. That'south a whole semester of your kids' higher you're drinking!

Imagine if y'all looked fifty-fiftymore long term and invested $100 a calendar month for 15 years. Your latte savings could grow to over $45,000. That's my dream car—a brand-new Tesla. (I mean, information technology's the entry-level model, but even so . . . it'southward a Tesla.)

And if you invest your savings for thirty years? Your java money could grow to over $280,000. A latte a day or a quarter-million dollars? You guys, I like Starbucks, but notthat much.

If you desire to set yourself upward to exist financially secure, detect small (or big) sacrifices you can brand right now. The way you interact with your coin today will touch on your future.

Goals Volition Get YouThere

Financial goals will help you change your mindset, your habits and your life.

When you're intentional with every dollar you lot take, every dollar will stretch farther. That means you become to exercise more than of the stuff you desire to do and plan for the things you'll do in the hereafter.

If you desire to do more than you ever idea possible, continue and set some goals. Decide what yous want your future to look like, and figure out what y'all need to practise today to make information technology happen.

Y'all canlive on your terms instead of the banking concern's.

You lotcan become out of debt once and for all.

Youcan build wealth and pay for things that affair to you.

Goals will get you there.

There are lots of things that influence the manner you set your financial goals—your life growing up, your motivations and your own dreams for the hereafter are just a few. I wrote my make-new book,Know Yourself, Know Your Money , to assist you understandwhy you handle money the mode you practice, andwhatto practise about it, and then yous can reach your financial goals faster than ever earlier.

And call back, it all starts with a budget. This is the foundation. It's the programme. And it'due south how you lot go intentional with your money. Bank check out EveryDollar and start your costless budget today. Then go moving on those five steps to setting and reaching your goals. No matter the time of the yr, you tin can brand these dreams into reality. Go get information technology!

Rachel Cruze

Most the author