Financial goals

How to set financial goals and reach them

How to set financial goals and reach them

Setting goals is an essential part of achieving success in life. Goals provide direction, focus, and a sense of purpose. They help individuals rank their tasks and divide resources. Setting goals can often be overlooked when it comes to finances.

Financial goals are an essential step toward achieving financial stability and success. Without proper planning and goal setting, it can be challenging to manage finances. This leads to debt, financial stress and missed opportunities.

Being financially stable is an important skill for anyone to have, including people with disabilities. Financial stability leads to self-reliance, independent living, greater freedom and the ability to achieve your dreams. This guide provides resources and information to help you work toward financial stability.

Types of financial goals

When it comes to finances, there are several types of goals you can set. In general, there are three types:

  • long-term: goals we set to achieve in five or more years. For example, paying off a credit card or loan, or saving up for a down payment for a house.
  • intermediate-term: goals we set to achieve in one to five years. For example, creating an emergency fund – up to six months of income set aside in case of an emergency.
  • short-term: goals we set to achieve in less than a year's time. For example, finishing college, paying off an auto loan, purchasing an asset such as a vehicle, or taking a vacation.

Your goals can be diverse, and different parts can be achieved at different rates. It’s important to note that goals must be specific. They should contain dollar-amount targets and specific dates for achievement. 

How to set financial goals

First: Identify your priorities.
Do you want to save for a down payment on a house? Pay off debt? Build an emergency fund? Plan for retirement?

Next: Create a plan that outlines the steps to achieve those priorities.
The key to setting realistic and achievable goals is breaking them down into smaller milestones.

For example, if you want to save $10,000 for a down payment on a house in two years, break that goal into smaller monthly targets. Tracking progress is important in helping you stay on track.

Now that we know what financial goals are and how to set them, try to set some goals for yourself.

Financial Goals Worksheet

Set your financial priorities, outline your goals and work on creating a budget with the help of this worksheet.

Download worksheet

How to reach your financial goals

Now that you have set your goals how do you reach them? One way to reach your financial goals is through budgeting.

Income and expenses

To create a budget, you will need to know your income and expenses:

Income is the money you receive each month from your job or other sources.

Expenses are the money you spend each month. This is for things like rent, utility bills, groceries, entertainment, savings, etc.

What is a budget?

A budget is a paper or electronic record of your planned income and expenses. It helps you to:

  • estimate and assign your spending
  • clearly see what purchase you can make without limiting your spending
  • identify overspending
  • balance your income and expenses.

A budget allows you to have better control over your money, which will help you reach your financial goals.

There are many benefits to creating a budget:

  • It gives you control over your finances while empowering you to achieve your goals.
  • It helps you establish your wants vs needs, and forces you to focus on what’s important to you.
  • It prevents wasting money on nonessentials.
  • A budget can help reduce stress.

Did you know?

Did you know that money is the number one source of stress among Americans? Studies show that Americans worry more about money than work, family or health.

How to Create a Budget

You can create a budget in three easy steps:

  1. Determine your income sources. This includes any salary, bonuses or other sources of income that you receive each month. 
  2. List all your expenses. This includes fixed expenses and variable expenses. 
  3. Subtract the total monthly expenses from the total monthly income. This shows you how much money you have left over each month. This is the amount of money you have left to either put into savings or spend on whatever you like.

Fixed and variable expenses

There are two main types of expenses:

Fixed expenses: These are expenses where the amount is the same each month. This can include things like your rent or mortgage, utilities and insurance.

Variable expenses: These are expenses where the amount can change each month. This can include things like groceries, entertainment or transportation.

There are free budgeting apps such as MintPocketGuardWally, and Goodbudget. These are easy and accessible ways to track your finances and spending all from a mobile device like your phone or tablet.

When budgeting, it’s important to make smart decisions and sometimes even sacrifices. For example, spending $5 a day on a coffee from your favorite café will add up to $1250 per year. You can achieve your financial goals more quickly if you spend a few minutes brewing a coffee at home.  

Tips for success

These tips can help you achieve your financial goals:

  1. Be goal-oriented about savings to achieve results.
  2. When shopping, ask yourself, “Do I really need it?” to avoid unnecessary spending. 
  3. Wait a month or two before making big purchases and see if the ‘need’ is still present.
  4. Try to spend your money wisely. Lower everyday expenses by comparing prices, using coupons and buying discounted goods.
  5. Be realistic. Focus on savings but allow some flexibility in spending to create a healthy relationship between spending and saving.

Setting and achieving financial goals requires discipline and mindfulness; however, finding the right balance will help you achieve financial freedom and peace of mind.  


Information source: Garman, E.T. & Forgue, R. Personal Finance, 13th edition. Mason, OH: South-Western, Cengage Learning, 2018, ISBN 9781337099752