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Setting financial goals is a great way to ensure you’re always in control of your personal finances. Whether you’re looking to save towards a particular purchase or simply want to manage your finance so you spend less, using financial goals as a motivational tool can help you achieve your aims and even make you happier.

What are Financial Goals?

A financial goal is simply a target you set yourself within your own personal financial circumstances.

Some examples of financial goals might be:

  • To spend less on your weekly household shopping.
  • To save towards making a large purchase, such as a deposit for a home or a holiday.
  • To put more money in your child’s bank account or trust fund.

These goals are quite general, but you can tailor them to meet your own individual circumstances. Specific financial goals based on the above might be:

  • Reduce my weekly shopping bill from $150 to $120.
  • Save $200 a month to pay for a holiday next summer.
  • Commit $30 per month extra to my child’s bank account.

The numbers will change depending on how much disposable income you have and the balance of your spending at present, but these suggestions should give you some idea of how you might want to lay out your financial goals.

You can also look to intertwine your financial goals. For example, in the points above we may use the $30 saving from the weekly shopping bill as part of the holiday savings fund, or use the saving from the first week of the month to pay the additional sum into the child’s bank account.

Why are Financial Goals Important?

As the saying goes, ‘tomorrow never comes,’ and when it comes to financial goals the same is often true.

If you have financial goals then you’ll immediately have a focus and put your mind to achieving your aims.

Knowing why you’re saving money is also a key factor in helping you to achieve your goals. If you’re putting money aside but for no specific reason, you’re more likely to dip into it, as you’ll have less to worry about when spending it. That said, there’s nothing to say you can’t use ‘saving for a rainy day’ as a goal, so long as you’re confident you’ll have the discipline to keep saving!

“If you have financial goals then you’ll immediately have a focus and put your mind to achieving your aims.”

Setting Your Financial Goals

To set your financial goals you should make sure they’re all:

  • Specific – Like our second example earlier, look to ensure the goal is as specific as possible. ‘Save $30’ is a much stronger motivator than ‘save something.’
  • Realistic – if saving $200 a month is going to be difficult, save a lower amount. Remember you can always adapt your goal later.
  • Flexible – As we’ve just mentioned, you need to set yourself goals but you should also leave yourself some room for change as your financial circumstances dictate.
  • Time Based – Alongside having a specific goal, this will work as a great motivating factor and can even be used to dictate the goal you want. For example, ‘I want to save $1,500 in the next 12 months. I will do this by saving $30 a week on my shopping bill.’

Another thing you should do is break your goals down into short term, medium term, and long-term goals.

Again, your personal circumstances may dictate that some goals need to be short term rather than long term, which may in turn influence how you set your own goals.

Below are some examples of the types of goals that might fall into each category.

  • Short-term financial goals – What do you want to achieve in the next six to 12 months? This could be linked to saving a certain amount for a holiday or towards the festive season, or if you have a personal loan or credit cards, you might want to increase the amount you’re paying towards these.
  • Medium-term financial goals – These goals might be ones that you will look to achieve in the next three to five years. Goals might be saving enough money to have a deposit for a home, buying a new car or paying off a hire purchase agreement, paying off a loan you recently took out, or saving a certain amount to a pension or your own retirement savings.
  • Long-term financial goals – What are your wider aims in life? You might want to build on your medium-term goal of saving towards retirement and have a long-term savings plan, perhaps even with a retirement date in mind. Other long-term goals might be to save enough to pay for your child’s further education, or towards a big, once in a lifetime holiday.

“Committing to and achieving your financial goals can help you live the life you want in the long-term, and the feeling of satisfaction you will enjoy when sitting on the beach or travelling around the world will be immense.”

Working Towards Your Financial Goals

While you might already have some ideas in your head of what you want to achieve within each category, ensure that you focus on your short-term goals first. This will ensure you don’t find yourself trying to achieve too many financial goals at once, which will likely lead to you failing to achieve any of them as you find you have too little money to commit to all of them.

What Will You Gain?

While financial goal setting and management can seem boring on the surface, once you engage yourself and think about what you can achieve, it’ll soon become apparent that it’s worth it.

Committing to and achieving your financial goals can help you live the life you want in the long-term, and the feeling of satisfaction you will enjoy when sitting on the beach or travelling around the world will be immense.

Disclaimer:  This article contains general comments and recommendations only. This article has been prepared without taking account of your objectives, financial situation or needs.  Before taking any action you should consider the appropriateness of the comments made in the article, having regard to your objectives, financial situation and needs. If this article relates to the acquisition, or possible acquisition, of a particular credit product you should obtain and consider the relevant disclosure documents before applying for the product.

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