Realistic Money Goals That Make A Big Difference
Setting financial goals is one of the best ways to succeed with money. Today, I will share the 7 most essential financial goals everyone should set and achieve. Plus, how to make your financial goals SMART.
Before we start, remember that achieving financial goals won’t happen overnight. The best advice I can give you is to get started, stay focused, and be patient with yourself. Additionally, make goals that are (SMART):
- Specific
- Measurable
- Achievable
- Relevant
- Time-based
Next, let’s review today’s seven financial goals.
Disclosure: At no cost to you, I may get commissions for purchases made through links in this post.
1. Build A Better Budget
Set a budget every month and do your best to stick to it.
Break your spending down into categories such as:
- Housing (rent or mortgage)
- Utilities
- Groceries
- Transportation
- Entertainment
- Travel
At the end of each month, compare what you spent to your budget for each category. Reflect on how you are doing. Make adjustments as you go.
Don’t beat yourself up if you overspend. Learn from it. And strive to do better moving forward.
Financial SMART goal example #1: I will create a monthly expense budget in a spreadsheet or online financial app and review actual spending against the budget on the first day of every month.
2. Boost Your Income For A Wealthier Tomorrow
Your earnings are the engine that propels you to financial freedom. Thus, consider ways to make more money. For example,
Ask for a raise. Get paid more for doing what you do today.
Earn a promotion at your current employer. Seek higher levels of responsibility and the compensation that comes with it.
Change jobs. Pursue more money for the value you provide by working for someone or someplace new.
Start a side hustle or small business to earn extra cash.
Financial SMART goal example #2: In one year, earn 10% more money than I make today.
3. Trim The Fat: Practice The Art Of Spending Less
Financial freedom comes only to those who live below their means. Thus, your expenses must be less than your earnings.
Housing, food, and transportation will typically consume most of your budget. Seek ways to reduce expenses in these areas.
Next, think carefully about what you value in life. What you love may include travel, movies, home renovations, dining out, wine, sporting events, or something else.
What you value is unique to you. So, whatever it is, allocate money in your budget to what you love. Then, reduce or eliminate expenses everywhere else.
Financial SMART goal example #3: By the end of June this year, reduce spending by $100 per month. Target dining out and streaming services for the bulk of the savings.
Pro tip: Use Rakuten for cash rebates on your online purchases
4. By Spending Less, You Can SAVE The Rest
Don’t let an emergency derail your plans for financial freedom. Thus, assign any extra money from your monthly budget for emergency savings.
Most financial experts recommend having 3-6 months of living expenses available. Determine your optimal emergency fund balance by reviewing the essential monthly expenses in your budget. Put the extra money in a high-interest-bearing savings or money market account.
Reserve your emergency fund for unexpected and vital expenses like:
- Medical bills
- Auto repairs
- Home maintenance
Financial SMART goal example #4: By the end of this year, accumulate a $1,500 emergency fund in a savings account at my local bank.
Goal number 5 follows, but first, PIN IT so you can return later:
5. Double Down And Ditch The Debt
Identify and itemize your debts. Reduce your non-mortgage debt by using any excess cash identified from your monthly budgeting process.
Most people owe money for:
- Credit cards
- Student loans
- Auto loans
- Personal loans
Get your credit cards paid off first. Then, target any other loans that you have. Your credit score will improve by making timely payments.
Financial SMART goal example #5: In 18 months, pay off all outstanding credit card debt.
6. Follow The Smart Money And Invest Wisely
If, at this point, you have money left over each month, congratulations. You are on your way to financial freedom.
However, your work is not done. Effective money management requires investing money wisely.
Your first three investing goals should be:
1. Maximize contributions to your employer’s 401(k) or 403(b) plan.
2. Fully fund an individual retirement account (IRA).
3. Make additional investments outside of your retirement accounts.
Focus your investment on stocks or low-cost exchange-traded funds (ETFs) invested in the broad stock market for long-term capital appreciation.
Financial SMART goal example #6: In January, I will sign up for my employer’s retirement plan and have $50 deducted automatically from each of my paychecks.
7. Review, Reflect, Adapt, And Improve
Review the results of your financial plans and financial goals at least annually. Make an honest assessment of your current state and how you are doing against your financial goals and plans.
Ask yourself hard questions, such as:
Did I stick to my budget? If not, why and what can I do to reduce my spending?
Am I making as much money as I deserve? How can I make more?
Is my emergency fund adequate?
Am I steadily reducing debt?
With any money left over, am I investing it wisely? What types of investments should I have at this stage in life? How are my investments performing?
People on a path to financial freedom routinely ask themselves these questions.
Financial SMART goal example #7: At the end of each calendar quarter, I will spend two hours reviewing my budget, spending, remaining debt, and investments while making new financial plans and goals for the next calendar quarter.
7 SMART Financial Goals – Wrap Up
You now have the framework for setting the seven most essential financial goals.
- Build your budget
- Maximize your earnings
- Reduce expenses
- Increase savings for emergencies
- Reduce debt
- Invest wisely
- Review and reflect often
Good luck. It’s time to get busy and slay your financial goals.
Related Reading To Level-Up Your Money Game
Check out our goal-setting article archives or dig into these specific articles:
- How to make a vision board for your financial goals
- How to set financial goals and achieve them
- 10 financial goals for students
That’s all for today, but before you go, PIN IT:
Author Bio: Tom Scott founded the consulting and coaching firm Dividends Diversify, LLC. He leverages his expertise and decades of experience in goal setting, relocation assistance, and investing for long-term wealth to help clients reach their full potential.