Financial Education Retirement Investing

How to Set Financial Goals5 min read

Jul 6, 2021 4 min
financial goal setting

How to Set Financial Goals5 min read

Reading Time: 4 minutes

I have a hard time looking at my finances and being happy unless I have an end use case for the funds.  Many years ago I started setting financial goals that focused on the short term, midterm, and long term.  Without an identified end goal, I found I was just saving money without a purpose, and while saving money is always a good habit, I found the habit become more of an addiction when I set out goals in front of myself so I could see them every day in my home office.  Today I’ll share with you how to set financial goals and hopefully provide some motivation for anyone out there that has had difficulty thus far.

How to Set Financial Goals and Achieve Them

As the 2020 pandemic taught us, it’s hard to be prepared for every type of possible crisis that could happen.  Every month, new things pop up that just get in the way of saving money.  Life can be a vicious cycle of events that do everything possible to derail us from financial goals. Just last month I saw myself invest significant amounts of savings into upgrading furniture, fixing a garage door, stopping a leaky roof, and dealing with a pet-related health scare.

When you don’t have at least a loose goal to go out and chase every day, you will be more prone to spend more money that you responsibly should.  You could even find yourself lacking funds to cover unexpected expenses like the ones I mentioned above.  Credit card debts can stack up and accrue interest, and all of a sudden you feel like you are stressing finances on a daily basis rather than counting down your days until you can retire.

Steps to Achieving Financial Goals

#1:  Make Goal Setting and Reviewing an Annual Goal.  

Goals can change, and that’s perfectly okay.  At one point I wanted to retire to Central America, and since then I’ve shifted gears and would like to live there seasonally, but not full time.  My goal changed to maintaining a residence in Florida and two other seasonal homes.  Identifying this desire, and putting it on paper as well as in front of me in my office to see on a daily basis reminds me that each month I need to add to my savings in order to achieve that goal.

#2:  Set Short Term Financial Goals

Long term goals are great, but I firmly believe we have to seize the day and live in the moment.  I know that sounds cliche, but having short term goals provides reason to celebrate, and the highs of achieving any goal help build momentum.  If you are looking to save $100,000 for a down payment on a vacation home you’d like to buy in 10 years, how about celebrating making the half way point when you save over $50,000?  By setting short term financial goals, you give yourself a measuring stick to see how you are doing achieving the long term goal.

saving money
Cryptocurrency investing in part of my midterm and long-term plan.

#3:  Establish a Budget

Budgeting can be the difference maker when it comes to gaining financial freedom.  Staying within a monthly expenditures budget helps you carve out money for retirement investing, adding to savings, and living within your means.

#4:  Create an Emergency Fund

I get very creative with emergency funds.  For starters, I take a portion of any money saved by staying under budget and put it into a shoe box.  Additionally, any unexpected money that I win always means I contribute some of that into the shoe box as well.  This can be in the form of a product rebate, finding $20 in my couch, winning money at a casino, or even the good old friendly wager.  The emergency fund comes in very handy when it a crisis surfaces or some unexpected financial need comes across my desk.  I like to keep my emergency fund full of about six months living expenses, just in case something very bad happens and I need to have cash on hand.

Other ways I’ve built up my emergency fund include selling off old items on eBay, Craigslist, or OfferUp.

#5:  Don’t Carry Credit Card Debt

I learned this lesson the hard way back in 2004.  I used to carry a LOT of credit card debt when my company was a start up.  However, after seeing how much money I wasted in interest payments as well as how little money I saved back then, it’s very obvious that carrying credit card debt can be a death sentence financially.  Pay off your credit card debt however possible!

credit card debt
Be very careful with credit cards!

Don’t Forget Midterm Financial Goals

Midterm goals are like checkpoints in life.  If you are saving for a certain expenditure, checking in halfway will give you a good barometer on your success, or failure, in achieving your goal.  It’s also important that mid way through your financial journey you have student loans paid off and life insurance investments, according to quotes by professionals on Investopedia.

Long-Term Financial Goals and Retirement

We all intend on safely retiring at some point. Some of us want to enjoy an early retirement while others will work away towards a financial goal that will ensure they will absolutely never have to go back into the work force or cut corners at some point to maintain their lifestyle.

I encourage you to read this page if you are looking to figure out your monthly retirement income needed to retire at various age levels.  It’s a full on guide to helping you make decisions in life, but of course, consult a professional after reading that page.

What are My Financial Goals?

It’s only proper that I write out my goals here and do my best to keep myself publicly accountable!  

Short term:  Within the next two years I’d like to secure a vacation home that will eventually serve as a seasonal residence.  I invest money monthly in cryptocurrency, the stock market, and cash accounts in order to achieve this goal.

Midterm:  I’m working towards adding money into these types of investments:  my home, precious metals like gold and silver, and cryptocurrency.

Long Term:  I continue to max out my SEP IRA that I have set up though my self directed retirement package.  Investing in dividend stocks, emerging markets, gold and silver, and other safe, long term plays.

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