Top Tips for Setting Financial Goals!

09 November 2020

Setting Financial Goals

Save My Bacon Top Tips for Setting Financial Goals

Do you want to be in a different financial position than you are now in a few months or a few years’ time? Do you want to make sure you have enough money to live comfortably when you retire? Have you got a retirement age in mind and want to make sure you have a financial strategy in place that will help you leave the workforce when you want to? To achieve all the above, you need to set yourself financial goals and plan ahead… as they say if you fail to plan you are planning to fail.

Financial Goals Explained

Financial goals can be set by anyone, regardless of the work you do or how much you earn! They are also essential in business.

They set out what you want to achieve in the short, medium, and long-term, and they give you a way to measure your progress. Here are some examples:

  • Examples of short-term financial goals would be to meet your budget over the coming month, pay for a holiday, or save enough money for the expenses you will need over Christmas.
  • Medium-term financial goal examples include paying off a debt, paying off your credit card or saving for a deposit to buy a house.
  • Long-term financial goal examples include saving for retirement or for your children’s university tuition fees, making money off compound interest or buying additional investment properties.

Setting Personal Financial Goals

The following eight steps will help you set your financial goals and plan for a brighter financial future!...

Step 1 - Read Up On All Things $

To plan for a brighter financial future, it pays to understand the world of finance a little better. Read up on how to manage finances, read about financially successful people or seek financial advice. There are so many great books out there, and treasure troves of information online that can help educate on the world of personal finance… get reading!

Step 2 – Discover What Matters To You!

The next step is often straightforward but actually quite challenging… sit down and ask yourself what you want to achieve financially – do you want to pay off debt or save for your retirement, for example? It is important to think it through and decide what matters to you financially in the short, medium, and long-term.

Step 2 – Narrow the Focus & Prioritise

Depending on what you decide in step 2, you might also need to prioritise the things that are most important to you. For example, you might want to start a business and buy a house, but it might not be possible to do both within the same timeframe. So, you need to decide which is the priority. Get creative!... draw out a timeline and pencil in your financial goals.

Step 3 – Make Sure Your Goals Are Realistic

While it is okay to push yourself and be ambitious when it comes to financial goals, it is essential they are achievable. Be ambitious, but also allow yourself enough time to reach your goals, and avoid a stressful panic trying to achieve goals too quickly. This will help keep you going in the right direction with the focus and motivation you need. After all, there is nothing you can gain from setting a financial goal that is impossible to achieve.

If you are paying off debt, or saving, make sure this balances out with your monthly outgoings, and leaves you enough surplus to still enjoy life. Remember life is happening right now, so don’t ignore the present!

Step 4 – Make Sure Your Goals Are Measurable

The goals you set in the previous steps should be specific, and they should have a deadline. This will help you measure your progress. Reward yourself when you pay off that debt, treat yourself and loved ones to a celebration meal or treat yourself with a little something… you deserve it!

Step 5 – Break Large Goals into Smaller Goals

Setting goals is important, but achieving them is important too, as it gives you motivation and further drive to move to the next stage. This is difficult, however, if the goal you have set is very big and will take you a long time to achieve. The solution is to break down large financial goals into a series of smaller goals that are easier and faster to achieve. Before you know it you will be further along the way to achieving that dream house than you think.

Breaking goals into achievable chunks helps you see light at the end of the tunnel, making everything more manageable and keeping you on track. If you are trying to reach a house deposit of $60,000 it may seem so outfacing that there is no point trying! But with a bit of planning and commitment, you may have that amount sooner than you think!

Step 6 – Write Down Your Goals, Oldschool!

This is a step that is often missed, but it is crucial. By writing down the financial goals you want to achieve, you will be cementing them in your mind while also ensuring clarity. Studies have shown that goals setters achieve their goals, and there is something about putting pen to paper that makes that goal stick in our minds, helping us truly commit to it! So write down those goals, visualise them, then get to work!

Another great way to stay motivated, is to create a ‘Vision Board’, this can include your dream house, maybe your dream car, an amazing holiday destination, your dream education, and also any health, wellbeing and relationship goals that you want to achieve. Setting goals needn’t just be financial, they can span across all parts of life!

Check out Kevin Bacon’s 2021 vision board! (including a sneak peak from our SMB App launching soon!):

Kevin Bacon's Vision Board

Step 7 – Create a Budget

Having a clear plan to achieve your financial goals is as important as setting them. A crucial part of developing this plan for most financial goals is to create a budget. A budget is a set breakdown of all of your income, outgoings (bills and regular spending), and spending. You can set yourself a weekly, monthly and/or yearly budget.

Understanding exactly how much you are spending and where, will allow you to see what you can cut down on. Eating out a lot, getting a few coffees out here and there, and shopping sprees add up and you might be surprised how much you could save with a bit of structure and pulling back on non-essential spending.

Step 8 – Monitor Your Progress

Achieving your financial goals won’t happen by accident, it takes commitment! You will need to work at it, but you should never do that in a vacuum. Instead, keep track of your progress and regularly review your financial position to see if there are changes you need to make to keep you on track. Have a monthly goal check in, or weekly goal date night, make it a fun ritual and before you know it it will become a way of life!

Financial Goals for Business

Looking to start a business? Setting financial goals for business is vital to be successful. They will be different from personal financial goals. Examples include increasing revenues, lowering costs, improving margins, and reducing debt.

While the goals are different, the process of setting financial goals for business is similar to setting personal goals. That said, you will need to go into more detail at various points along your goal setting journey.

For example, you may need to conduct a market analysis to determine if your goals are feasible. Other examples include reviewing past performance and setting financial targets that have meaning in relation to achieving your overall business goals.

Finally on the topic of financial goals for business, it is also important your financial goals are aligned with your business goals. This alignment is where you will find the most success.

Achieve the Life You Want & Live a Little Brighter

Setting financial goals is an essential part of having the money to do what you want to do with your life in the short, medium, and long-term. It’s not a difficult process, although achieving your financial goals will require a level of personal discipline. The benefits and rewards make it worth it!