Setting realistic financial goals is what separates the successful from the unsuccessful. Goals are good for every area of life, but setting financial goals specifically is important. The process of setting goals is just as important as having them, so let’s look at what it takes to set realistic and effective financial goals.

Determine Your Goals

Just like with any goal, a realistic financial goal needs to be specific, attainable and written. It will only hurt you to set a goal for an amount or a time period that isn’t realistic. It is very important that you write a specific goal, including all of the numbers involved.

All goals should be written.

Goals should also be few in number. You should set a few, very specific goals.

Goals should be S.M.A.R.T. (Read about S.M.A.R.T. goals here)

You’ve probably heard the popular statistic: only 3% of people write their goals down and that says something about the small amount of people that stick with goals and achieve them. Putting goals in writing holds you accountable to the goal.

Separate Your Goals

When setting realistic financial goals, it is important to separate them into lengths. Short term and long term are necessary, but it’s better to be even more specific. You need a written goal for these time-frames, at a minimum:

3 Month | 6 Month | 9 Month | 1 Year | 3 Year | 5 Year | 10 Year

Keep going! You can have goals that last through the rest of your life and you should. You’ve probably heard “if you fail to plan, you plan to fail” and this is very true in finances.

Build Your Goal

To have a specific financial goal, you need to include what, how and when. What will you accomplish? How will you accomplish it? When will you accomplish it? Here is a great example of a goal:

“6 Month Goal: By July 12, 2014, I will have paid $5000 extra on my car loan by working a second job earning $10 per hour, working 20-25 hours per week at Paul’s Pizza Parlor.”

This goal is specific, realistic and attainable. If you earn $10 per hour working 20-25 hours per week over 6 months, you can earn $5000. This goal can be achieved, but if something changes, then the goal could change too, which is why it’s important to review your goals.

Review Your Goals

It is important to look at your goals at least once a month. Review them and determine which goals you have accomplished. You may also need to change some goals or time-frames. If you are realistic, then you can tell when a goal is not going to be achieved. Be honest with yourself. It’s important to change your goals or time-frames so that it is possible and reasonable for you to accomplish it, but if you are realistic when setting the goal, you shouldn’t have to change them often. Goal setting and achieving is all about discipline and perseverance.

Goal Setting Worksheet – Simple worksheet to get your goals on paper.
Personal Capital – Track all of your spending in one place. For free.