How to Set Great Financial Goals and Keep Them

LOS ANGELES, March 23, 2021 (Newswire.com) - Setting financial goals is a great way to set your sights on a bright financial future. But, often, people set goals that are too broad, like:

• I want to save money for a house/emergency fund/business/vacation/etc.
• I'm going to spend less this year.
• I'll pay off my student loans and be debt-free.

These goals are difficult to track and even harder to stick with. Great financial goals are clear and specific, enabling you to work towards establishing better financial habits.

The Art of Goal Setting

Setting financial goals enables you to see how your money is working for you. And, often, seeing progress in reaching your short-term goals can motivate you to stay on track for the long term.

The best goals follow the SMART process. Using this acronym will help you to create financial goals that are:

1. Specific: Define your goals down to the dollar amount. An example of a specific goal is to plan to pay $100 extra per month towards your auto loan every month for the next year.
2. Measurable: How will you know when you've hit your goal? A goal like becoming debt-free can be measured by when you pay off all existing debt. But a savings goal should have a dollar amount in mind so you can objectively say whether you've reached your goal or not.
3. Attainable: Make sure your goal is realistic. If you bring home $2,000 per month, it's probably not attainable to say you'll put $1,000 of that towards paying off debt.
4. Relevant: Be sure your goal and its associated outcome are personally meaningful. Just because all of your friends are opening investment accounts doesn't mean you should have that as a goal if what you really need is a beefy emergency fund.
5. Time-bound: Set a deadline for achieving your goal. Goals that aren't time-bound tend to drag on endlessly.

Using these steps, let's go back to the broad financial goals above and turn them into great goals.

• I will save $100 from each bi-weekly paycheck and put it in my new emergency fund, which I will build up to $1,000 after 10 paychecks.
• I'm going to spend less by creating a spending plan that allocates $200 each month towards eating out, down from my current spend of $300. To make this happen, I commit to eating out only three days a week, down from my usual four to five, and will cook at home the nights I stay in.
• I will put an extra $50 from each paycheck towards paying down my student loans, enabling me to pay them off in 2023 instead of 2025.

How Can I Stick with My Financial Goals?

Make them real: Writing down your goals is the first step in bringing them to life. The more you see them, get familiar with them, and talk about them, the more real your goals become. And goals that seem real are more likely to be achieved.

Automate if you can: If you can set up an automatic payment towards an online loan or transfer to a savings account, do it! The best way to ensure you'll stick with goals is to make sure it happens in the background, so you're not faced with the consistent decision of whether or not to put money towards your goal.

Get an accountability partner: This might be your significant other, best friend or mom. Ensure that the person you choose as your accountability partner will support you to stay on track with your financial goals. Avoid choosing your happy-hour buddy who may want you to blow it "just this once" so you can grab drinks.

Remember why you started: The "relevant" piece of goal setting is critically important. When you're faced with the choice of sticking with your financial goal or spending money elsewhere, remembering why you chose the goal and what it will mean when you hit it can be the best motivation.

Reflect on progress and celebrate: It's essential that you reward yourself for hitting milestones and achieving your goals. If you've successfully saved your goal amount to pay towards your student loans for six months, check out that account and see how drastically your payoff date has changed. Then be sure to reward yourself with a favorite movie, a fancy coffee drink, or whatever small reward makes you feel celebrated.

If you miss a month of saving towards your new home, that's okay. Reset and get back on track next month. Nobody is perfect, so give yourself grace, and remember that keeping with your great financial goals over the long term is what matters.

Notice: Information provided in this article is for informational purposes only. Consult your financial advisor about your financial circumstances.

Source: iQuanti, Inc.