Anyone can set a financial goal. It’s as easy as establishing what you want and giving yourself a deadline to achieve it, right? This is why so many of us fail or fall short of our financial goals. It isn’t as simple and straightforward as that. Wouldn’t it be great if it was? Setting achievable financial goals requires a lot more thought and internal work. If achieving our financial goals was so easy, everyone would surely do it and already be living their dream life of financial freedom.
So, what sets people apart from those who achieve their goals and don’t? Those who have succeeded mostly have the knowledge and understanding that it requires getting to the root of what they really want and what it takes to get there. It is a mix of mindset work, self-reflection, planning, and strategy that will get you closer to the life you wanted. It doesn’t have to be difficult but it does require work that only you can do. I’m not going to leave you hanging though. Here are 6 tips on setting achievable financial goals. There is also a little bonus for those reading to the end.
Setting Achievable Financial Goals Tip #1
Determine the Desired Emotional Outcome
Whether we like it or not, our emotions run the show most of the time. It is our emotions and feelings which help us to navigate through life and make decisions. Denying this fact when we talk about our financial goals would just be silly. Why wouldn’t it be equally important for this after all? The stiff way in which a lot of us were taught about money was literally void of emotion. There is no wonder we associate accountants as this bland-suited and rigid profession. This is wrong, albeit, kinda funny.
One mistake I see all the time with people who are trying to set achievable financial goals is that they focus on a number; “I want to save x amount of money by x”. Does this get you excited? Is this a motivating sentence? I don’t know about you, but it sure isn’t for me.
Let’s try this instead: “I want to feel ease and comfort no matter what life throws at me”. This for me evokes a lot of feeling and something that I would more likely push myself to achieve.
Setting Achievable Financial Goals Tip #2
Write Down 3 Ways that Money Will Help You Achieve Those Outcomes
This requires a mindset shift in how we perceive success. This might be tricky as you will initially be hellbent on the idea that, of course, having more money will make you happier. But, why would it make you happier? Not because you have more green paper, but because of what that would mean for the life of you and your family.
Now that you have the emotional outcomes you want to achieve, write down three ways that money might help you get there. Money, at the end of the day, is an instrument for achieving desired results. We are by no means denying the importance of it but we are labeling it as what it is, a tool. One of the many definitions for a tool is; “a thing used to help perform a job.” This is a great way to view money.
So, make that list, and don’t forget that you can also jot down some non-money ways that you can achieve the outcomes too.
Here are some examples to get you started:
- Having an emergency fund with a minimum balance of $5,000 dollars in it
- Paying off all debt
- Saving for retirement
Setting Achievable Financial Goals Tip #3
Timeline Those Steps in Order
We now move from mindset to planning. Once you’ve established what you really want and how money can be used to achieve it, it’s time to map out a timeline. Before we go any further. You don’t need to be afraid of setting time limits on your goals, just because you weren’t able to achieve something in the past. Life changes, things happen, circumstances shift. It’s called life. You can alter and adapt your goals so that they work for you and that you aren’t working for them.
You can set out a timeline on paper or on a calendar, whichever suits you better. Timeline the steps you would end to take in order to achieve your financial goals. Keep them realistic and tailored to your life and situation.
Always take one step at a time. What is the most important to you to achieve? Perhaps it is having that emergency fund or paying off a credit card. Write down the steps that you need to take in order to achieve that goal and a time frame. Remembering that once that goal is achieved, the emotional outcome you wanted will also be achieved.
Setting Achievable Financial Goals Tip #4
Find Out the Actual Cost of Putting Those Steps into Place
In order to know for sure if your goals are feasible, you need to establish the cost of putting those steps into place. Don’t leave anything out. We can often trip ourselves up with forgetting to include inconspicuous expenses that inevitably will add up. Let’s take our example of an emergency fund. How much cost is involved each month for me to reach that goal by the timeline set? It may sound laborious and tedious to be so precise but I cannot stress enough that it is this level of eagle-eyed rigor that will separate those who succeed with their financial goals and those who don’t.
Setting Achievable Financial Goals Tip #5
Break Down the Cost Divided by Time
Something that is super effective in any type of goal setting is taking large goals and things that feel completely unattainable and breaking them down into smaller and specific tasks. Now that you know the cost involved in achieving your goal, break this down over the time frame you’ve given yourself to achieve the goal. This can not only ensure that you keep exactly on track but as everything is broken down, it becomes less scary and will decrease your anxiety about taking on these goals.
Sustainable and achievable financial goals must work in our favor. It shouldn’t feel like a sacrifice and it shouldn’t be daunting. Breaking down each part is a foolproof way of ensuring that it works every time.
Setting Achievable Financial Goals Tip #6
The less work the better. We want to make this something that is part of your life but requires the least amount of effort. Automating savings can ensure that you stay on track.
I highly recommend using the You Need a Budget app. I’ve been using it for the longest time now. It can sync up with your bank account and allows you to put money into different budgeting categories. You could have one called “Emergency Fund” and automate an amount to go in each month. I have an affiliate link with them (that’s how much I believe in this app) where you can get 34 days for free.
Let’s Sum Up!
6 Tips on Setting Achievable Financial Goals.
- Determine the Desired Emotional Outcome
- Write Down 3 Ways that Money Will Help You Achieve Those Outcomes
- Timeline Those Steps in Order
- Find Out the Actual Cost of Putting Those Steps into Place
- Break Down the Cost Divided by Time
- Automate Savings
For more budgeting tips and advice, check out the Bulletproof blog. I also have this Strategic Savings Guide to get you started.