How to Set and Reach Your Financial Goals
A goal is a wish your heart makes . . . when you’re wide awake and ready to start getting things done.
And it's time to get things done with your money—to set and reach your financial goals.
Part of being an adult is realizing there’s no fairy godmother who makes your money wishes come true—which is good, because it also means your dollar bills won’t turn into pumpkins at midnight. The trade-off is, you’ll have to work to make these financial goals come true. But you can do this—because it’s worth it.
What Are Financial Goals?
You’ve probably thought about other life goals: getting fit or healthy, becoming more intentional with your time, or learning a new skill. But what about money goals?
Financial goals are where you want to be—financially—in the next five, 10 and 20 years. Or even next year. You’ve got to think about the big and small things when you’re writing out your goals.
And yes, you have to write them out. Goals are dreams in action. And the first step to putting them in action is writing them down. When you put goals into words and keep them in front of your face as both a reminder and a motivation, you’re beginning to bring them to life. So give them breath. Write them down.
10 Examples of Financial Goals
But wait. How do you choose which goals to set for yourself? Where do you start? Start here—with this list of 10 financial goals:
1. Create and stick to a budget.
When you get serious about your finances, you have to start budgeting. Not only is this one of the top 10 financial goals people set each new year, but it’s also the foundation you should build all other money goals on.
That’s because a budget is a plan for what you’ll do with all your money. It’s a plan for what’s coming in (income) and what’s going out (expenses). When you budget every month, you’re giving your money purpose. You’re telling your money where to go so you don’t wonder where it went.
If you aren’t budgeting—you can’t gain momentum with your other money goals.
2. Build up an emergency fund.
Life happens. But you can be prepared for any money problems that come your way if you’ve got money saved up. We’re talking car trouble, medical expenses, and busted toilets—some of the worst parts of being an adult. But when you have an emergency fund, you can rest well at night knowing you’re able to stand up against a financial threat without being beaten.
Start with $1,000 in savings. Then pay off all your debt (the next goal we’ll dive into). After that, get yourself a fully funded emergency fund, which is 3–6 months of expenses.
When you’ve got an emergency fund, you’re ready for those “life happens” moments. Instead of living paycheck to paycheck, you’ll be living with confidence.
3. Get out of debt.
It’s time to get serious about crushing debt. For. Good. Because debt’s good for one thing and one thing only—holding you back. And you don’t have time for that crap. Sure, plenty of people are still living on credit cards and taking out car and student loans, but you don’t want to be like them.
More and more people are putting this goal on their financial to-do list each year. Join that movement and shout from the rooftops (literally or figuratively): “Debt sucks!” Then live like you mean it!
4. Live on less than you make.
The best way to get ahead is to stop getting behind. It’s not poetry. It’s not rocket science. It’s common sense.
Getting ahead with your money is possible. You just have to start living on less than you make. So what does that mean and how do you get there?
It means you spend less money than you’re paid each month. Then, you can put any money that’s left over toward whatever Baby Step you’re on. The Baby Steps are money expert Dave Ramsey’s proven plan for winning with money. They cover saving, getting out of debt, and building wealth. See how all those things help you get ahead and move forward?
You also get ahead by becoming more intentional about your spending. Budget every month, find deals, use coupons, pay cash, and—to be perfectly blunt—learn to say no to stuff you don’t need.
And the easiest way to make sure you’re not spending more than you make is to create a plan for your money—aka a budget—and stick to it. That’s how you make sure you spend less—so you can knock out all your money goals faster.
5. Travel more.
Not all money goals are serious and stuffy. Some look really good on Instagram—like eating croissants and taking selfies in front of the Eiffel Tower. Is traveling one of your top money goals? Maybe you don’t want stuff as much as you want experiences. Or maybe you’ve just always had the travel bug.
Either way, start a sinking fund for the trip of your dreams. A sinking fund is a way to save money by putting aside a set amount each month. Like if your vacay is in six months and will cost $1,200 total, you should put $200 a month into your sinking fund.
It may take some extra effort and serious saving to make your travel goals happen, but—if you’re willing to do the work—you can make it come true!
6. Save money to pay cash for big items.
Not only should you cash flow travel, but you should also cash flow big purchases. Cars, furniture, technology—these things cost money. And having dollar bills in hand to pay for these items—in full—is a fabulous financial goal. This puts you in the driver’s seat, steering you toward owning things rather than owing for things.
7. Stop living paycheck to paycheck.
So, 78% of Americans live paycheck to paycheck.1 That means all their money comes in and goes right back out. Each month’s paycheck pays only that month’s bills with no looking to the future—because they just can’t afford to save any money yet. Living like this is about as secure as using a parachute made of cotton candy. It won’t hold up or keep you from crashing to the ground.
If you’re stuck in this cycle, know you don’t have to stay here. Seriously. You just have to start budgeting monthly, spending less, and saving more. But in the end, you’ll gain security like you’ve never known.
8. Pay off your home.
There’s no place like home. It’s where you sleep and eat and hang your heart. It’s also usually the largest expense in your budget. We specifically recommend spending 25% or less of your take-home pay to cover your mortgage plus tax, insurance, HOA fees, and private mortgage insurance (PMI).
Now, take a moment to imagine getting about 25% of your income back to spread out over your savings account, travel fund, favorite charity, home-improvement bucket list, and retirement account. That’s what happens when you pay off your mortgage. And that’s why this is a fantastic goal. The work is hard, but the payoff is more than worth it.
9. Save up funds to help your children pay for college.
One of the greatest financial myths of today is that it’s not possible to go to college without going into debt. And it’s one heck of an expensive myth. Because guess what—a debt-free degree isn’t just possible. It’s the only way anyone should do college.
Students who plan on going to college should get serious about applying for scholarships and grants. They should always consider in-state and community college options and—yes, really—work while in school to pay for tuition and fees.
We know parents often think about their kids one day living the dream of going to college—and they want to help pay for it. If you’re in this boat, know that navigating the waters of college savings funds isn’t as difficult as you may fear. Don’t feel pressured to make or meet this money goal, but if you’re financially able, helping your children pay for college would be an incredible blessing to give them.
Whatever you do—never take out a loan or let your kid take out a loan for college. That’s like digging a hole that can take up to 30 freaking years to climb out of.2 No. Thank. You.
10. Live your retirement dreams.
As you imagine your golden years, what do you see? Do you want to pack up an RV and see all of America? Do you want to read every book on your shelves? Do you want to take up a dream hobby you’ve always waited to dive into until you had the time and money to really do it right?
No matter what you picture this future looking like, you’ll need money to make it happen. When you stop working, your income goes away. So having a financial goal in place to replace that paycheck with retirement investments is not only nice—it’s necessary!
Why Is It Important to Set Financial Goals?
If you don’t set goals, things won’t change. You’ll stay right where you are—in the land of wishful thinking. And while that’s a fun place to have some daydreams, it’s no place to live.
Financial goals give a voice and direction to your dreams. They give them shape, activity and life. Don’t kill your dreams. Instead, set financial goals to help you reach them.
How Can You Achieve Your Financial Goals?
Write out your goals.
We said it once, and we’ll say it again: You won’t do them if you don’t write them, speak them, see them. So do it. NOW. If you need help shaping your dreams into real-life goals, get the EveryDollar Goal Getter’s Guide!
Find someone you trust to talk through your goals with. This needs to be someone who can give you a reality check and encouragement along the way—someone who’ll check in on your progress and cheer on your accomplishments. Having accountability means you don’t leave your dreams on your own shoulders—you pick someone to help you carry the load.
Follow a solid plan.
If you look over that list of 10 financial goals, you might feel a little overwhelmed. Where do you start? What comes next when you decide you’re ready to make your money goals a reality?
Use those 7 Baby Steps we mentioned earlier. Walking this financial journey all the way to retirement is a long and winding road, so you should take one (baby) step at a time.
Start budgeting. Why? A budget gives your financial goals direction by giving your money direction. Because when you budget, you tell your money where to go and make it work just as hard as you do.
Good news: It doesn’t even have to be boring or hard to budget. With the EveryDollar app, you can start budgeting in minutes and keep up with your spending on the go.
Track your expenses.
No budget works if you set it up and leave it alone. That’s like adopting a puppy, bringing it home, telling it not to chew up your shoes, and then leaving for work. That puppy’s going to chew up your shoes. And the rest of your house. That’s what untrained puppies do.
So once you set up your budget, you still have to keep up with your spending by tracking your expenses, which is super easy when you have EveryDollar Plus, the premium version of the app. Connect your budget to your bank account, and your transactions will stream right to the app. You just drag and drop them to their right budget line.
Keep your shoes unchewed and your spending in check. Train your puppies and track your expenses.
Become more self-aware.
Socrates once said, “Know thyself.” And he knows what he’s talking about. While you’re trying to make these financial goals a reality, remember that your greatest cheerleader and opponent, hero and villain is . . . you. So in this case, listen to Socrates. . . and us!
Know your money weaknesses and set up a plan to avoid or overcome them. Know your money strengths and build on them as you celebrate every victory (big and small). Plus, being more self-aware is one of the top keys to crushing any goal.
Reevaluate your goals every now and then.
Life changes. People change. Goals can change. That’s okay. Don’t abandon a goal just because it’s going to mean hard work. But don’t hold on to an outdated goal just because you don’t want to feel like a failure. Accepting that you’re heading in a different direction than you once thought isn’t failure. It’s actually healthy!
Reevaluate your money goals every year, every six months—and maybe every month if you want! Never be afraid to make changes so your goals fit where you are and where you’re going.
Goal getters, you’ve got this. Seriously. Whether it’s a new year, a new month, or a random day and you’re feeling motivated to change—you can do it. Goals are dreams with work clothes on. So get them dressed and ready to come true.
And it doesn’t have to be January 1 for you to turn your resolutions into revolutions. Download our free Goal Getter’s Guide and make it happen! You. Can. Do. It.