No matter what stage of life you’re in, you should have financial goals. Your financial goals may be simple or complex, short or long term, small or big. Some more common financial goals are saving money for retirement, purchasing a house, traveling, or paying down debt. So, how do you accomplish these financial goals?

Think of the goal you would like to accomplish and when you would like to accomplish it. Keep in mind many financial goals align with personal goals. Do you want to retire with a certain amount of money, do you want to pay down your debt by a certain date, do you want a car, do you want to travel? Then, consider how much money you need to accomplish your  goal and when you would like to accomplish it. You can discover this number by some simple research on what your goal is.

Once you have a list of your goals, their estimated cost, and when you would like to accomplish them by, you need to prioritize them by their importance to you. When setting financial goals I find it easier to work backwards. Look at the goal at the top of your list and it’s deadline, calculate the number of months between today and your deadline date, this number will tell you how many months you have to save money. Divide the total estimated budget, of your goal, by the number of months till its deadline and you will then have the amount of money you need to save each month.

For instance, I set a personal goal of traveling once a year because it is something I greatly enjoy and it’s something I want in my life. This translated into a short term financial goal of saving $1,500 for my first trip. I estimated this should cover airfare, accommodations, food, transit, etc. Keep in mind, some financial goals take more research than others. I wanted to take my trip in one year, providing me with 12 months to save. To figure out my monthly savings amount I did the simple math of 1500/12=125. I needed to save $125 per month to take my dream trip. My next step was to review my budget and figure out where the $125 per month would come from.

When you really look at your budget, once you have been tracking it for a couple months, you will be surprised to learn where some of your money is going. For instance, how I started saving for my trip was by not purchasing as many coffees per week. I set a small financial goal of only purchasing 2 coffees per week. Setting a small goal of only purchasing 2 coffees a week when I was previously purchasing 4, saved me $10 per week, that is $40 per month, and $480 per year. Yes, this may not be all of the money I needed each month for my travel goal but it brought down my needed amount to $85 rather than $125. Think about where you can compromise, whether it be eating out, entertainment, drinks out, or cab rides, you will be surprise when you break things down by category and learn how much you are spending. Upon further review of my budget I had a little more than $85 per month in my budget not being spent, which gave me my needed total of $125. After reviewing your budget you may not need to compromise on anything.

Keep in mind with some larger long term goals, such as retirement, you should also consider the interest gained in the accounts you deposit your funds into. You can use an estimate of the interest gained to learn how much money you will have by the end of your set deadline. Financial goals should not be overwhelming. The key is to break financial goals down into achievable steps and small goals. Once you break them down they are much more easily achieved.

 

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This blog post is provided for discussion purposes, and is not intended as professional financial advice. It’s intent is not to be used as the sole basis for your investment or tax planning decisions. To get more information please speak with a financial planner. Under no circumstances does this information represent a recommendation to buy or sell securities.