Financial goal setting and financial freedom go hand-in-hand. The thing about dreams though, is that they are only achievable if you have the financial capacity to make them happen. Had your eye on a new car? Or have a wedding to plan? Turning them from thought to action requires a concrete plan. But first, that means getting crystal clear on your goals. There’s nothing like achieving a goal to get you excited about what you can accomplish next. It’s the fuel to your fire!
And the truth is, you can set new financial goals at any time and for any reason. You just need to have the drive and perseverance to accomplish them. So, let’s talk about how to go about setting goals the right way.
But first: Why do I need to set goals?
Setting goals is important for a number of reasons. One of the most significant reasons is that it helps you to clarify what you want to achieve and to prioritise your actions. This can be particularly important when it comes to managing your money, as it can help you to make informed decisions about how to allocate your financial resources in order to achieve your desired outcomes.
Additionally, setting goals can provide you with a sense of direction and motivation, and can help you to track your progress over time. This can be particularly helpful when it comes to managing your money, as it can help you to stay focused and to avoid making impulsive decisions, like falling victim to summer and winter sales, that may not align with your long-term goal of putting a deposit down on a home. Finally, setting goals can help you to hold yourself accountable, which is one of the key ingredients to achieving financial success.
The golden rules of setting goals
In order to give your journey towards financial freedom the boost it deserve, you need to decide your SMART GOALS. That means Specific, Measurable, Achievable, Realistic and Timely.
It can be tempting to set a goal like “improve my finances”. But what does that mean? When you look back in a year to see if you have achieved it, how will you be able to tell? That’s why you need to avoid the trap of setting vague financial goals with little direction, and master the ability to set specific goals that are actionable and and achievable. So have “improve my finances” as an umbrella goal, but set specific goals underneath it. It could include things like “set a budget”, “pay off high interest debt” or “start investing”. And underneath those goals, get even more specific. Underneath “set a budget” you could have “save £500 a month”. You see how easy it is to start working towards those goal now? Setting specific goals is an easy win, and it’s an essential one if you want to achieve your money goal. You can visualise the outcome and what's more, you'll know if you hit your target every month.
The goals you’re setting should always be measurable. And by logic, trackable. If you can’t measure it, how will you gauge your progress? You need to set goals objectively so you can determine whether you've achieved it. So let's say you’re ready to embark on your investing journey and you’re ready to start pumping money into stocks every month. Set a number you want to have contributed to them every month so that you can track whether you're actually reaching your goals. For example, it could be “invest £200 every month into stocks and shares”. Or perhaps you’ve decided a goal it to “budget for a holiday” you have coming up next summer. Turn that goal into “save £150 for my holiday every month”. This puts you a stronger financial position to measure, track and smash those goals!
One of the biggest obstacles to achieving a goal is setting your expectations too high, only for you to be deflated and unmotivated when you inevitably don’t meet them. A key way to hit those key financial milestones is to take achievable steps. That means breaking your goals down into small, manageable chunks and setting small goals you can actually achieve. Let’s say you have £5,000 of high-interest credit card debt to pay off, set the goal of paying £500 every month if that’s what your monthly income allows for. Setting an unachievable goal of paying the debt off in one full sweep won’t get you towards your financial goals any quicker.
The first step towards financial freedom is your SMART goals. What are they for you?
Being realistic about your money goals requires one simple thing: getting real with yourself. Don’t set yourself up for failure by setting goals you know you won’t be able to achieve. Yes, your goals should be challenging. No, they should not be unachievable and completely unrealistic. Let’s say you’ve just started at a company but you’re not overjoyed by the salary. Setting a goal of getting a pay rise in the first month, is in most cases, unrealistic. It takes time to prove yourself above your colleagues. So with that said, it’s important to set goals that are achievable within a certain time frame. So when setting goals, ask yourself: is the goal reachable, given the time and resources? And am I able to commit to it alongside other commitments? If the answer is no, it’s time to rethink your strategy.
Finally, your goals should have a deadline. Having a deadline can provide a sense of urgency and can help you to prioritize your actions in order to achieve your goals within a specific time frame. It will also aid the process of tracking your progress and on ensuring you don’t diverge off the course to your financial money goals. Furthermore, setting a deadline for your goals can provide a sense of accomplishment and can help you to celebrate your successes along the way. So make sure you set a specific time and determine when your goals needs to be completed.
Write your goals down
When you have decided on two to five goals, there is something magical about putting pen to paper and getting crystal clear on what you want to accomplish. It gives your goals life, and they’ll become even more real when you see them on paper. Why?
Well writing your goals down can help to clarify your thoughts and to make your goals more specific and tangible. This can be particularly helpful if you have a lot of different goals or if your goals are somewhat abstract. Writing your goals down can also make them more concrete, which can make them easier to remember and to focus on.
Writing your goals down can also help to make them more meaningful and to increase your commitment to achieving them. When you write your goals down, you are essentially making a contract with yourself, which can help to reinforce your commitment and to hold yourself accountable.
Finally, writing your goals down can also help you to prioritize your actions and to develop a plan for achieving your goals. When you write your goals down, you can organize them in terms of priority and importance, and you can create a step-by-step plan for achieving each goal. So if you want to stay focused, motivated, and on track, start writing your goals down.
Plan for your money goals
Once you have set five goals, it’s time to break down each goal and make a schedule. Let’s say your goal is to save an extra £5,000 over the next 12 months. Whatever it is you are planning for, you’ll need save £416 a month or £104 a week.
For each of your goals break them down each into chunks like this and start tracking them daily, weekly, monthly or quarterly. We recommend either writing it down on paper or using excel. Finally, you will need to make a schedule of actions. These actions could include things like:
- Updating you budget to reflect your new goals
- Calling your bank to set up a dedicated savings account
- Setting up automatic transfers either weekly or monthly
Make your financial goals easy to achieve
Unfortunately, many people give up on their goals before they even have a chance to make progress. But there’s no reason why it can’t be easy. People who are successful in achieving their financial goals practice the following.
1. Focus on your schedule of actions, not the goal deadline
Sometimes focusing on a deadline can make it seem like what you want to accomplish is so far away that you have plenty of time to get things done “later”. But then all of a sudden, it’s so close that it’s too late to do anything. When you focus on your schedule of actions for the big goals, you are more likely to do what’s required to accomplish your goals as a result of your consistent actions.
2. Figure out a way to stay motivated
It is easy to set a goal or think of a goal, but as time passes, we all seem to lose the necessary motivation to complete and fulfil these goals. And the truth is, motivation is key to your success!
Even though there will be setbacks and failures when it comes to your financial goals, it’s important to keep yourself motivated. A few ways to do that include:
- Creating an award system: Once you define your goals, you might fall into the trap of working so hard to achieve them, that you end up overindulging. Instead, aim for steady progress a little at a time and make a plan for how you will reward yourself for the small wins
- Setting aside a portion of your budget: Saving money to devote to a small splurge now and then is key to your emotional and financial wellbeing. At the end of the month or week, if you stuck to your financial goals, you can afford to celebrate and indulge. This is more sustainable than cutting out all your favourite things entirely (because we all need sushi nights in our life)!
3. Surround yourself with likeminded people
If you’re on a mission to save a certain amount of money or pay off a certain amount of debt, it’s best to be around people who are also in it to win it, just like you. These people can keep you accountable for your financial goals. A great place to seek out like-minded people is right here at Female Invest. Here, you will find a plethora of women seeking a community of people with the same financial goals as you.
4. Seek out more information on personal finance
Reading books, listening to podcasts and attending events are all great ways to continue learning and getting inspiration for how to accelerate the route to reaching your financial destination. There are so many great resources for this (obviously, we recommend all our own), but if you want some other sources, head over to our instagram @femaleinvest for our best recommendations.
5. Start small
We’ve all heard of the snowball effect. For instance, although it may make sense to tackle your largest debts first, tackling all your small debts first is great for your motivation because you’ll get to celebrate those small wins much faster than if you started with your highest balances. This, in turn, will keep you motivated and excited to go after your bigger financial goals. So, as you start to think of your goals, consider how you can set them up so you can reap the motivational benefit of achieving those small wins.
6. Set and go
Setting financial goals the right way and going after them is your opportunity to achieve your wildest dreams, blow your expectations out of the water and make real progress towards your financial success. There’s power in that! So here’s to setting some amazing goals – let’s go!