Guide to Setting and Achieving Your Financial Goals

Do you have trouble paying off debts or struggle to afford small purchases? Is there something specific you’d like to buy, but you don’t know how you can afford it? Do you want to start saving for something big, but you don’t know where to start? Setting financial goals and developing a plan to achieve them is how you make it happen!

If you’ve never set financial goals before, this guide will teach you the steps you need to take in order to turn dreams like, “I wish I could pay off that debt” or “someday I’ll buy a house” into reality. If you’re ready, let’s dive into Step 1: Deciding what’s important to you.

Step 1: Decide what’s important to you

The first step to setting financial goals is to decide what’s important to you.

Would you like to pay off your debts? Do you want to save for a vacation? Would you like to pay for your child’s education? Do you want to save for retirement? Or do you have a bunch of goals you’d like to achieve?

Don’t hold back — at this stage, you don’t have to worry if something feels out of reach, you just need to get your dreams down on paper so you can evaluate what’s possible and start planning from there.

Step 2: Categorize your goals

Once you have all of your financial goals written down, it’s time to categorize them into groups based on which are most attainable right now and which will need more time and planning.

✓ Short-term goals (within 1 year)

These are goals that, with proper planning, you can achieve within one year. Examples of short-term goals include: creating and sticking to a budget, paying off a small debt, creating an emergency fund, buying a specific item (like a new washer/dryer) or taking a vacation.

✓ Medium-term goals (1-3 years)

These are goals that will take a bit more time to achieve but are still within reach. Examples of medium-term goals include: paying off bigger debts, buying a car, starting a business, paying for your wedding, or finishing your degree.

 

✓ Long-term goals (5+ years)

You can think of these as the “big” purchases or even as lifelong “habits” that will improve your life (or the life of someone you love) over the long haul. Examples of long-term goals include: buying a home (or paying off a mortgage), saving for your child’s tuition, or consistently adding to your retirement fund.

Step 3: Develop a plan for achieving your goals

Now that you know your goals and, roughly, how long it will take to achieve them, it’s time to start thinking about how much money you’ll need to achieve each goal, which will vary depending on your goal.

For example, if your short-term goal is to pay off a specific debt, you know the exact amount you need to save (or start working toward) in order to achieve that goal.

But there will likely be goals on your list that aren’t so clear cut — for example, a vacation budget could vary greatly depending on where you want to go and the same principle applies for things like cars, homes, or even college tuition.

If you don’t know the exact dollar amount for each of your goals, that’s okay — a rough estimate (or even an “overestimate”) is better than no estimate at all.

As you plan this out, start brainstorming all the ways you can make your financial goals a reality, including saving each month, cutting back on expenses and thinking about how you may be able to earn extra money.

Step 4: Create your budget

In order to make progress toward your goals, you’ll need to create a budget (or several budgets) to make that happen.

If you’re already feeling overwhelmed at the mention of the word “budget,” relax — budgeting is easier than you think, as it just comes down to 3 simple steps:

Step 1: ​Add up your monthly income
Step 2:​ Add up your monthly expenses
Step 3: ​Subtract your monthly expenses from your monthly income

Once you know whether you’re operating within a surplus or a deficit, you can take action from there.

For example, if you have a surplus of $200 each month, decide which of your goals you’d like to tackle first and put $50 of that surplus towards it (or divide it evenly among several goals).

If you have a deficit, look into your spending habits and see if there are ways to cut back, for example, reducing the number of “want” purchases (i.e. – shopping, entertainment, etc) vs the “need” purchases (i.e. – groceries, mortgage payments, etc).

To learn more about budgeting, ​check out this article from our blog which teaches you the basics of setting a budget​.

Keep your goals on your mind and stay positive

While achieving your financial goals is possible, it won’t always be easy.

The important thing is to stay positive and truly believe that you can make any goal happen.

Make a list of your goals and look at them every single day.

Think about them often and talk about them with family and friends.

The more your goals are on your mind, the more likely they are to happen. In fact, there is even something called the Law of Belief which states,​ “Whatever you believe, with feeling, becomes your reality.”

If you need help along the way, our team is always standing by to help you with your banking needs or to offer words of encouragement and support.

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Read more about the ​purpose and objective of Financial Literacy Month​.

This article is part of Financial Literacy Month at Cashco. This year, the theme is “Take Charge of Your Finances!” and we’re celebrating by sharing weekly tips around managing money and debt more wisely, saving for the future, and understanding your financial rights and responsibilities.