How to Set Financial Goals: The Ultimate breakdown

If you follow me on Instagram, you know how much I talk about goal setting. I firmly believe it is the most important part of someone’s financial journey. Why? Because without a destination, where are you going to go? In the end, a whole bunch of nowhere! I know I’ve previously touched on goal setting in my New Year’s Resolution post. But, there’s still so much confusion surrounding the topic. And since I believe it is incredibly important, I decided to give y’all an ultimate breakdown. That way, you can confidently set financial goals today!

How to set financial goals

How to Set Financial Goals

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What Are Financial Goals?

First, lets discuss what financial goals are! These can be anything you hope to achieve that affect your financial situation. That could include debt payoff goals or savings goals. But, it can also include retirement goals or career goals. Maybe you have investing goals as well. Or, maybe you’d like to begin travelling regularly. Wanting to buy a new home or car could also be a financial goal. Start thinking of all the things you’d like to achieve throughout your life and write them down.

Creating SMART Goals

Next, we need to establish SMART financial goals. This is a simple formula for creating focused goals that you can achieve.






  1. To ensure your goal is specific, it must be clear and defined. If you get stuck, consider the 5 W’s. What, who, when, where, and why? So, don’t say, “I’d like to buy a house.” Instead say, “I will save $20,000 for a down payment on a home by 2026 for my family.” Including your reason why can be motivating for those times when you want to give up.
  2. By providing a deadline and amount, this goal becomes measurable. If you have saved $20,000 by the end of 2026, then you have achieved your goal. You could break it down even further to say, “I will save $4,000 per year for the next five years.” Then, you can measure your success each year until the goal is met.
  3. $20,000 is a lot of money for most of us. Is it attainable for you to save that much within five years? Can you spare $4,000 per year until you reach this goal? The last thing you want to do is create an unattainable goal.
  4. Relevance must also be considered. Is this a goal you truly want or something you think is expected by society? Will reaching this goal positively impact your life? Does this align with your other goals? Don’t create goals that you think you should do. Instead, create goals that will make you happy.
  5. Your financial goals must have deadlines. That’s not to say you can’t reevaluate your goal and make changes. But, having a target to aim for makes your goal that much more attainable. You’re less likely to fall off track and become distracted when you have a clear end date.

The Three Types of Goals

Now that we’ve created smart financial goals, we must create a timeline to reach them. Thankfully, there are three main tiers for goal setting that you can use to form this timeline. Ultimately, each tier is dictated by how long it will take you to reach your goal. So, you have short-term, intermediate, and long-term goals.

Short-Term Goals

Short-term goals are goals you can reach within one year. This could include setting money aside for your emergency fund. Or, it might involve paying off a credit card. Don’t forget, your goals don’t always have to specifically involve money. A short-term goal could involve finishing a certificate or training program. Which could help you negotiate that raise you’ve been wanting.

Intermediate Goals

Intermediate goals are goals you can reach within five years. This could include saving for the down payment we discussed earlier. Or, it might involve saving for a vehicle. Also, making financial decisions such as purchasing life insurance. It could even include earning a degree, so you can begin working toward a larger career goal. Remember, some of your goals will be stepping stones toward larger goals.

Long-Term Goals

Long-term goals are goals that take longer than five years to reach. So, paying off your mortgage or reaching career goals would be included. Not to mention, saving for your child’s tuition or paying off your student loans. Many people will include their life-long goals in this category as well. That will usually involve your retirement plan. Consider things like your 401K and your Roth IRA account goals.

How to set financial goals

Goal Setting Tips

Since we have the basics down, lets go over some extra tips you need to know to set financial goals!

  • To begin, you need to create a budget. This will help you stick to your plan as you work to achieve your goals.
  • Furthermore, you’ll need to limit distractions that will negatively impact your journey. Such as unnecessary expenses.
  • Additionally, you’ll also want to start managing your time. Then, you’ll be able to focus more on your goals.
  • Another great idea could be creating a vision board to give you motivation on days that you want to give up.
  • Also, look for communities to join that are on similar journeys. That way, you have people to keep you accountable.

Since we’ve covered just about everything concerning financial goals, I want to add that it’s okay to need help! If you’re still struggling to set financial goals and achieve them, find a financial advisor. Feel free to reach out to Pacific Capital to schedule an appointment regarding your goals!

Lastly, don’t forget to comment below with your best goal setting tips! And, if you enjoyed this post, share it with your friends!

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