Skip to main content

How to Set Goals for Personal Finances

By: Get News

Setting goals can help people work to achieve a particular outcome. This is true of habits, behaviors, and finances. It can be hard to know which financial goals to work on first and how to create an actionable plan around them.

For many people, the first financial goal they had in life was a piggy bank. The coins would clink together to make a glorious chime that indicated how close it was to being full. This simple but effective tool teaches the power of setting a goal (and the fun of smashing the piggy bank to get access to its treasure).

As adults, it can be easy to forget the importance of setting financial goals. People can struggle to be intentional about envisioning the future or are simply too busy with the here and now to plan out how to reach their goals.

“Setting goals helps trigger new behaviors, helps guide your focus, and helps you sustain that momentum in life,”1 wrote Leslie Riopel, MSc., Professor of Psychology at Northwood University.

Whether the hopes for the future are to invest an extra $5,000 this year or to retire with $2 million, setting a goal can help lead people closer to where they want to be. And whatever the financial goal is, here’s some advice on how to set them:

Short-Term or Long-Term

This is the first thing to determine when it comes to setting goals. A short-term goal, such as investing a certain amount of money this year, needs to be obtainable. So think of short-term goals as smaller amounts broken up into a short period of time, leading towards a larger goal. For instance, someone might decide to pay off their car early in order to be able to invest more. This could be a goal as simple as paying an extra $50 on the principal each month.

For a long-term goal, on the other hand, be sure to go big! This may be getting that dream retirement home, having a certain amount to live off of in retirement, or taking that worldwide trip that’s been on the bucket list for years. Take space to dream a little bit!

https://positivepsychology.com/benefits-goal-setting/.

Once those big dreams are identified, work backwards to see what it will take to achieve them. This could be a monthly goal or it could be several milestones that indicate progress.

4. Places to Start for Setting Financial Goals

When determining what financial goals to set, here are four areas to start with:

1. Create consistency. Whether paying down a mortgage to own a home free and clear OR making sure a retirement is fully funded, the key is to make a realistic plan (that supports short-term and long-term goals) and stick to it. This could be through creating a budget, paying extra on a mortgage, or investing regularly. Being consistent financially is the best way to cover the basics.

2. Set income goals. It’s important to consider current income when setting financial goals as well. If the current income amount in the household will not allow someone to reach those long-term goals, it may be wise to consider if they need to adjust their goals or begin planning for ways to increase household income.

3. Set goals for the total portfolio. A total portfolio means every part of retirement is covered from investment accounts to insurance to income. If every part of someone’s portfolio is not in place right now, that’s okay! The key is to work at it over time so all those elements are in place by the time retirement comes.

4. Utilize SMART goals for finances. This stands for Specific, Measurable, Achievable, Realistic, and Time-Bound. For example, a SMART financial goal would look like this: “I will invest $2,000 each month this year so that I will have invested $14,000 by December 31, 2023.” That’s specific and time-bound, which allows someone to plan more easily for how to reach it.

Talking to a financial planner is a great way to know what goals to work on first, and which strategies can help make progress towards those goals. Schedule a Retirement Blueprint Financial Review with 210 Financial today

Insurance products are offered through the insurance business 210 Financial. 210 Financial is also an Investment Advisory practice that offers products and services through AE Wealth Management, LLC (AEWM), a Registered Investment Advisor. AEWM does not offer insurance products. The insurance products offered by 210 Financial are not subject to Investment Advisor requirements.

Investing involves risk, including the potential loss of principal. 1764446-4/23

Media Contact
Company Name: 210 Financial
Contact Person: Carrie Stahl
Email: Send Email
Phone: 309 263 1333
Country: United States
Website: https://210financial.com/



Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.