There are few things that can offer greater personal satisfaction than achieving the financial goals you’ve been working hard to reach. The problem is that it can be easy to lose focus, causing your goals to fall by the wayside.

There are a number of reasons why people don’t wind up reaching the financial goals they’ve set for themselves. Fortunately, there are things you can do that can help increase the chance you’ll reach the next financial goal you set for yourself. Some of them are covered in this article.

• How do you Meet Financial Goals?
• How can you Achieve Your Financial Goals?
• What are Some Good Financial Goals?
• How do you Write an Effective Financial Goal?

How do you Meet Financial Goals?

Personal finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. That’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

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Though setting financial goals might seem to be a daunting task, if one has the will and clarity of thought, it is rather easy. Try using these steps to get you started.

1. Be Clear About the Objectives

Any goal without a clear objective is nothing more than a pipe dream, and this couldn’t be more true for financial matters.

It is often said that savings is nothing but deferred consumption. Therefore, if you are saving today, then you should be crystal clear about what it’s for. It could be anything, including your child’s education, retirement, marriage, that dream vacation, fancy car, etc.

Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives that you foresee in the future and put a value to each.

2. Keep Goals Realistic

It’s good to be an optimistic person but being a Pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going beyond what you can realistically achieve will definitely hurt your chances of making meaningful progress.

It’s important that you keep your goals realistic, as it will help you stay the course and keep you motivated throughout the journey.

3. Account for Inflation

Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” This quote sums up what inflation could do your financial goals.

Therefore, account for inflation^[1] whenever you are putting a monetary value to a financial objective that is far into the future.

For example, if one of your financial goal is your son’s college education, which is 15 years from now, then inflation would increase the monetary burden by more than 50% if inflation is a mere 3%. Always account for this to avoid falling short of your goals.

4. Short Term Vs Long Term

Just like every calorie is not the same, the approach to achieving every financial goal will not be the same. It’s important to bifurcate goals into short-term and long-term.

As a rule of thumb, any financial goal that is due in next 3 years should be termed as a short-term goal. Any longer duration goals are to be classified as long-term goals. This bifurcation of goals into short-term vs long-term will help in choosing the right investment instrument to achieve them.

By now, you should be ready with your list of financial goals. Now, it’s time to go all out and achieve them.

How can you Achieve Your Financial Goals?

Whenever we talk about chasing any financial goal, it is usually a two-step process:

• Ensuring healthy savings
• Making smart investments

You will need to save enough and invest those savings wisely so that they grow over a period of time to help you achieve goals.

Ensuring Healthy Savings

Self-realization is the best form of realization, and unless you decide what your current financial position is, you aren’t heading anywhere.

This is the focal point from where you start your journey of achieving financial goals.

1. Track Expenses

The first and the foremost thing to be done is to track your spending. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you will be surprised by how small expenses add up to a sizable amount.

Also, categorize those expenses into different buckets so that you know which bucket is eating most of your paycheck. This record-keeping will pave the way for cutting down on un-wanted expenses and pumping up your savings rate.

2. Pay Yourself First

Generally, savings come after all the expenses have been taken care of. This is a classic mistake when setting financial goals. We pay ourselves last!

Ideally, this should be planned upside down. We should be paying ourselves first and then to the world, i.e. we should be taking out the planned saving amount first and manage all the expenses from the rest.

The best way to actually implement this is to put the savings on automatic mode, i.e. money flowing automatically into different financial instruments (mutual funds, retirement accounts, etc) every month.

Taking the automatic route will help release some control and compel us to manage what’s left, increasing the savings rate.

3. Make a Plan and Vow to Stick With It

Learning to create a budget is the best way to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be organized

Nowadays, several money management apps can help you do this automatically.

At first, you may not be able to stick to your plans completely, but don’t let that become a reason why you stop budgeting entirely.

Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options, and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

4. Make Savings a Habit and Not a Goal

In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that, in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

Make savings a habit rather than a goal. While it might seem to be counterintuitive to many, there are some deft ways of doing it. For example:

• Always eat out (if at all) during weekdays rather than weekends. Weekends are more expensive.
• If you are a travel buff, try to travel during off-season. You’ll spend significantly less.
• If you go shopping, always look out for coupons and see where can you get the best deal.

The key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice, which will be harder to sustain over a period of time.

5. Talk About It

Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission.

Therefore, in order to stay the course, surround yourself with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

6. Maintain a Journal

For some people, writing helps a great deal in making sure that they achieve what they plan.

If you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

When you have a written commitment on paper, you are going to feel more energized to follow the plan and stick to it. Moreover, it is going to be a lot easier for you to track your progress.

What are Some Good Financial Goals?

Financial goals are the personal, big-picture objectives you set for how you’ll save and spend money. They can be things you hope to achieve in the short term or further down the road. Either way, it’s often easier to reach your goals if you identify them in advance.

Start by setting some financial goals. If you’ve never thought much about this, here are 10 good financial goals that everyone should make a priority in 2020.

1. Have a Well-Stocked Emergency Fund

We normally think of having an emergency fund as being a short-term financial goal. And from a mechanical standpoint, that’s true. However, an emergency fund has important long-term benefits, which is why it’s one of the good financial goals that you should plan to achieve.

Here are just some of the benefits that a well-stocked emergency fund can provide you with throughout your life:

• It can take away a lot of the money worries that you have since you know that you will always have a reserve should you get into a tight spot
• As is expected of an emergency fund, it will be there to cushion the blow in the event of a sudden emergency, such as a job loss or a large medical expense
• It’s an important money management tool – if you can save money for an emergency fund, then you can save money for any financial goal that you have
• It provides you with an intermediate funding source – a kind of halfway point between your paycheck and your investment accounts – that you can use so that you don’t have to disturb your long-term investments
• Just having an emergency fund will make the wide swings in the stock market more emotionally tolerable, knowing that your survival isn’t at stake when the market falls

When you consider all that comes from having a strong emergency fund, it should move it up the priority ladder a few rungs.

2. Get Out of Debt – Completely

The great thing about this goal is that anyone can do it, regardless of income or wealth level. And if you want to get the most out of your finances, it’s virtually a requirement that you get out of debt.

For the moment, let’s ignore the good-debt-versus-bad-debt debate. At some point in your life, all debt is bad debt and needs to be paid off. That includes the mortgage on your home. Although the purpose of that debt may be noble at the beginning, it’s no less a drag on your income than any other debt as time goes on.

There are more reasons to get out of debt than I can list here, but here are just a few of them:

• Getting out of debt means that you’ll have full control over your income – and that’s an incredible feeling
• It will leave you with more money for savings and investing – and even more for spending
• It will remove the asterisk from your finances – I make $X,000 per month, but $X00 has to go to pay my debts
• It will make it easier to quit a job you don’t like
• It will free your mind of the worry and stress that come with debt

3. Plan For Early Retirement

Even if you absolutely love what it is you do for a living, planning for early retirement is one of those top-rated good financial goals.

A recent survey from Provision Living suggests that 43% of millennials have $5,000 or less stowed away for retirement. The survey also revealed that most millennials are concerned about their retirement and doubt they will have enough to live on.

Here’s why planning for retirement is crucial:

• Reaching your retirement goals may take longer than you think; if you plan to retire at 50 you’ll have plenty of time to make it by 65 in the event that you hit a few snags
• Poor health could make early retirement a necessity – if you’ve planned and prepared to retire early, then you will be ready
• Family circumstances often require more of your time, and early retirement will help you to have it
• Though you may not want to fully retire early, you may decide that you would like to downshift and not work so hard
• It’s better to be able to retire early and not need to than to need to retire early and not be able to

There’s one other advantage to planning to retire early, and it’s a big one. By working toward early retirement, you will be front-loading your retirement investment portfolio. That will give you a larger portfolio early, which will mean that you won’t have to work so hard saving for retirement later in life when doing so may be more complicated.

4. Create Multiple Income Streams

Even if you love your job, creating multiple income streams is a form of income insurance. For that reason alone, it needs to be on your list of good financial goals.

But here are even more reasons:

• One of those income streams could be the part-time cash flow that enables you to semi-retire at an early age
• If you want to start your own business – but don’t want to quit your job – starting a side business could be the way to do it
• The extra cash flow from any additional income stream could be used to help fund your retirement savings
• It could also be used to help you pay off your debts
• Several income streams could provide you with an income portfolio, that means that you’re not dependent on a single source of income – ever!

Reading Rich Dad, Poor Dad was a defining moment for me.  Before then I was oblivious to the concept of having multiple streams of income.  Over the years, I dabbled in many side hustles looking for “it”.  That included a few multi-level marketing companies that proved to be a flop.

5. Have Enough – But Not Too Much – Insurance to Cover Contingencies

Insurance is something of a tough call. A lot of people don’t have nearly enough coverage, while many others are paying too much for the coverage that they have. Striking a balance between the two is another of those good financial goals.

Here are some strategies in striking that balance:

• Where life insurance is concerned, stick with term life insurance – it’s cheaper so you can buy as much as you need. Just make sure that you’re not buying so much life insurance that you’ll be worth more dead than you are alive; it’s just an expense you don’t need to carry
• Unless mandated by state law, look into carrying the lowest level of auto insurance possible, particularly if you have a long history as a safe driver
• Take the highest deductible you can on your health insurance, and make up the difference with an emergency fund that is large enough to cover that deductible – if you seldom use your health coverage, you’ll be way ahead from the lower premiums

Part of your goal should be to work with a knowledgeable insurance agent on a regular basis to make sure that you have just enough – but never too much – insurance coverage.

6. Be Able to Live on Less Than You Earn – No Matter What

It is well worth repeating here since it is one of the most necessary of all good financial goals. By learning to live on less than you earn – no matter what – you will always have plenty of income. That means that you’ll have plenty of income for savings, investments, and for paying off debt.

It’s important to always be on the hunt to increase your income. But that strategy will only be effective to the degree that you are able to live on less than you earn so that you can put the difference to better use to improve your life.

7. End Any Addiction to Stuff That You May Have

This may not be a financial goal in and of itself, but it is an obstacle that will stand in the way of all good financial goals, no matter what they are.

An addiction to stuff can be like a financial parasite. A disproportionate amount of your income and financial reserves will go to pay for your need for stuff.

This will present several problems:

• Stuff needs to be stored, and as your pile of stuff grows, you will need an ever larger space to store it. That will likely see you looking to buy a bigger house every few years, with all of the expenses that come with it
• Stuff is a capital trap – it ties up your money, but generally provides no financial benefit
• Any money that goes into stuff, is money that is not going into productive investments
• While stuff can make you more comfortable, only income producing or growth-oriented investments can improve your station in life
• During times of financial turmoil, you may become obsessed with protecting and maintaining your stuff, which is not at all what you need to focus on
• Stuff has a way of eating up time so that you have less of it to spend on more productive activities

If you even suspect that you may have an addiction to stuff, then make it a financial goal to end that addiction once and for all. Your life will go better if you do.

8. Plan to Do Work That You Love

Ultimately, the purpose of improving your finances should be to provide you with independence in your life. That means that it should afford you the ability to do what you want when you want. If that isn’t one of the good financial goals, then I don’t know what is.

A recent Gallup Poll suggests that engagement at work, defined as enthusiastic involvement and commitment at work, is at an all-time national high at 34%. While that number may be higher than in the past, it still only constitutes 1/3 of American workers. That means quite a percentage of the population is indifferent, or in some cases, downright miserable, when it comes to their job.

Getting out of debt, preparing for early retirement, developing multiple income streams, and ending your addiction to stuff, should clear the way for you to be able to do the kind of work that you really love. That should be true even if the work doesn’t pay nearly as much as you’re being paid now.

But that will be possible only if you have no debts to pay, if you can live on less than you earn, and if you have a large investment portfolio to back you up.

Why is doing work that you love a worthy financial goal? Very few people will actually be retiring to the beach for a life of blissful nothing, no matter what you see on TV. If nothing else, it’s likely that you will work just as a matter of personal satisfaction – or an attempt to avoid boredom.

Since you will be working all of your life – one way or another – the work that you do shouldn’t just be about earning money. It should be something that makes you feel good about your life and good about the person you are.

9. Get Comfortable Sharing Your Good Fortune

If you can’t get comfortable sharing your good fortune with people who are less fortunate – perhaps out of fear that you will end up broke as a result – then money has complete control over your life. It doesn’t matter how much money you amass in your life, it should never control you.

There are numerous reasons why giving to others will be good for you:

• Letting go of money affirms your power over it – because you know that it will come back
• Giving to those in need makes you part of the solution in the world and not the problem
• Hoarding money is all about security – letting go of it is celebrating its value
• Giving to others just feels good – particularly the knowledge that you have the ability to do it
• Call it Karma, a higher power, what-goes-around-comes-around, or whatever you want, when you give you get – maybe not always in the form of money, but often in the form of friendship, personal satisfaction, or even help from others when you’re in need

Is giving one of those good financial goals? If you look at many of the most famous wealthy people in the world, you will see a distinct pattern of giving to others along the way.

10. Plan to Leave Your Financial House in Order Upon Your Death

However you live your life, it should be a goal to make sure that your loved ones are left at least a little bit better off as a result of your life. That means not only making adequate provisions for those who are dependent upon your financial resources but also making sure that you don’t leave them with a financial mess to clean up.

Here are some steps you can take to leave your financial house in order upon your death:

• As discussed in #5, make sure that you have adequate insurance, particularly life insurance
• Make sure all of your debts are paid, and if there are any large or unusual ones, by a term life insurance policy to pay off that debt upon your death
• Consider the impact of estate taxes, if your estate is large enough to be subject to them (insurance can cover that too)
• Discuss the financial implications of your death with your loved ones, to make sure that everyone understands what you want to do, and also so that you will consider any concerns or insecurities that they may have
• Make sure that you have set an example of good financial management for your loved ones – what they learn from you will benefit them for the rest of their lives, and probably more than any amount of money you could leave them

Reaching a point of financial independence in life has nothing to do with luck or magic. It’s simply a matter of setting good financial goals and having a concrete plan as to how you will achieve them.

Once that plan is established, and working toward those goals becomes part of the habits that make your life what it is, achieving financial independence can almost seem as if it’s happening on automatic pilot.

How do you Write an Effective Financial Goal?

Setting financial goals that you’re likely to accomplish is easier said than done, but there are some proven techniques that make success much more likely. If you want the best chance of being able to achieve your financial goals, do these six things when you set them.

1. Only set goals you really want to accomplish

It’s up to you what you want your financial goals to be — but if you don’t really believe in them, you’re not likely to achieve them.

If you don’t really want to buy a house, for example, you’re unlikely to be very motivated if you set a goal to save for a home down payment. That’s even if you feel pressure to make this a goal because your friends and family assume you’ll become a homeowner.

Take the time to really think about what matters most when it comes to your money, and pick a few key goals you want to work toward.

2. Make your goals specific and measurable

In order for something to be a goal, rather than just a wish, it’s important you have a very clear definition of success. In other words, if you want to retire early, your goal can’t just be “save enough to retire early.” After all, a “goal” this vague doesn’t really give you anything concrete to work toward.

When you set your goals, be very detailed about what you hope to accomplish and make sure you define exactly what success means. If your goal is to retire early, this would mean figuring out what specific age you want to retire, determining exactly how much money you’d need to do it, and then deciding how much you’d need to save each month to achieve your goal.

3. Ensure your goals are reasonable

Setting a goal you can’t achieve is setting yourself up for failure, and is likely to discourage you from making more financial goals. As you establish specific, measurable goals, make sure that you can actually achieve what you’re setting out to do.

This doesn’t mean you shouldn’t push yourself to try to accomplish big things. You can set goals that seem just a little bit out of reach if you’re willing to push yourself and go the extra mile. But don’t make your objectives impossible.

Retiring at 30 years old when you’re already 28 might be out of reach unless you win the lottery, but you might instead be able to make a realistic plan to retire at 40 if you really buckle down.

4. Break big goals down into small ones

A lot of things you want to do with your money involve saving what seems like a fortune. Early retirement, for example, might necessitate saving $1 million, while even saving for a $100,000 home down payment may take years.

Instead of setting a big goal that you’re miles away from achieving, break your big objective down into a series of smaller milestones. You could set a goal to save $20,000 a year toward that down payment, for example, or to max out your 401(k) every year.

By choosing a goal you can accomplish within a reasonable time frame, you’ll have the finish line in sight and be a lot more motivated to push yourself than if your win won’t occur until the distant future.

5. Set a timeline

With any goal you set, you want to have a specific deadline for achieving it, otherwise it may just stay on your to-do list forever.  

Establishing a timeline for achieving your goals allows you to track your success more easily to make sure you’re on the right path. It gives you something to look forward to so you’ll be inspired to hit your deadline. It can also help you to figure out exactly what you need to do to achieve your objectives.

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If you know you want to hit your goal of saving $100,000 for a down payment for a house within five years, you can work backwards to determine that this means you’d need to save $20,000 annually. If this isn’t doable, you can make adjustments to your goals, or you can find another way to hit an objective that seems impossible — such as taking on a side gig or moving to a cheaper place in the meantime.

Ideally, your deadline for achieving any of your goals should be no more than a few years out. If you have a goal that will take much longer to accomplish, this is where breaking it down into smaller objectives becomes important.

6. Track your progress

Finally, it’s imperative you monitor your efforts to achieve your goals so you can make adjustments if you stray off course. You can use apps or a spreadsheet to track your savings progress, or come up with a creative way to visualize your success.

If you’re trying to save $100,000, you could build a big Lego tower and add a new section each time you save $1,000. Or, you could make a paper chain representing the debt you’re trying to pay off and remove a link each time you drop your balance by $100.

Whatever approach you take, just make sure you have a way to see your progress so you can stay excited about your successes as you get close to achieving your goal — and so you can spot setbacks quickly and adjust.

Final Thought

Setting financial goals and achieving them comes with a lot of benefits. You enjoy financial freedom and you have the sense of fulfilment. Like you will have noticed, there is a lot of work required to achieve this kind of success. SO now is the time to get to work.