How to Set and Achieve Financial Goals, according to John Moakler
Financial goals may seem intimidating, but they don't need to be. Priorities vary based on who's setting them. Finding an equilibrium between short-term and long-term financial goals should be your goal.
Breaking down significant goals into manageable steps and milestones is the key to maintaining motivation and reaching a goal more efficiently.
1. Write it down
As with any goal, financial ones are best accomplished when an established framework is in place. That could include an actual plan you create yourself, LP from budgeting apps, or guidance from credit counselors; regardless of its form, one key to reaching goals is writing them down to ensure you don't lose track of them or abandon them midway, leading to failure and potential setbacks.
Sort your financial goals into short- and long-term categories to better prioritize and fund them, such as an emergency fund. Other short-term goals could be paying off debt or investing money toward home improvement projects, while long-term objectives might include saving for college education costs or retirement.
Prioritize your goals based on what's most essential and motivating to you. For example, if watching home makeover shows or planning trips to Disneyland drives you, that could inspire you more quickly than saving for a college education alone. Or if being financially secure by the time your children have graduated may be more important to you - saving for a house may take priority over saving for their college education to reach that goal faster.
No matter your motivations, setting specific aspirations-driven financial goals can make them easier for you to meet and adhere to. That way, it becomes more likely that you'll see them through to completion using tools such as budgeting apps, automated savings apps, or online banking to track progress and stay on course, as noted by John Moakler.
2. Make it measurable
Financial goals need to be specific if they're to be met effectively, while vague or unrealistic ambitions will only lead to disappointment. Simply declaring, "I want to save more money," doesn't provide much direction on how or why. To measure progress effectively and set benchmarks along the way - for instance, "I will save $5,000 by the end of this year" provides a clear goal you can work toward.
Once you've identified potential financial goals, use the SMART method to prioritize them: Specific, Measurable, Achievable, Realistic, and Time-bound, as highlighted by John Moakler. Doing this helps create more attainable and realistic goals that fit easily into your budget. For instance, if saving for a vacation is part of your plan next year, automatic deposits into an emergency savings account could help ensure you reach it on schedule.
Attaining financial success requires setting relevant goals that align with your overall financial plan. Otherwise, motivation to reach these goals could become challenging to maintain. It would be best if you saw that what effort is being expended today directly correlates to securing its future benefit.
Assuming your goal is debt repayment, getting out of it will give you greater control of your finances and more freedom to focus on things that matter to you. If you need help connecting your goals to the bigger picture, speaking to a professional about potential options could provide invaluable perspective and make every dollar go further.
3. Decide on a time frame
Based on your financial goals, you must determine how long it will take you to meet them. Financial goals typically fall into three categories: short-term goals can include anything that can be accomplished within one year - like purchasing a new TV or computer system; mid-term goals could involve paying off debt with debt snowball strategies like the debt snowball strategy or saving for a down payment on a home.
Long-term goals involve reaching them over five years, such as retirement savings or tuition fees for your children's college education. According to John Moakler, budget constraints and other financial commitments should be carefully considered when selecting time frames when setting such long-term goals.
As part of setting financial goals, it's also crucial to prioritize them. You can do this by reviewing bank statements or budgeting apps to see how much you spend on each item and then categorizing goals as critical, need, or want to determine which goals require prioritization for saving purposes.
Setting financial goals may seem intimidating, but essential to building a better financial future. By setting SMART goals, automating your budget, finding accountability partners, and visualizing success, you can begin making real progress toward your financial goals. Need some extra help staying on track? Take our free quiz and be instantly matched with a financial advisor who'll provide recommendations tailored to your needs!
4. Make it realistic
Setting financial goals should be realistic; otherwise, they will feel unattainable. Furthermore, make sure the goals reflect your values and vision of success for yourself.
One way to make your financial goals more attainable is by applying a SMART strategy - Specific, Measurable, Attainable, Relevant, and Timely. Doing this will allow you to develop a budget explicitly tailored to your circumstances while helping ensure the goals you set are obtainable.
An effective way of making financial goals more attainable is to break them into short-term and long-term goals, clearly showing where your priorities lie and how best to prioritize them. For example, short-term goals could include paying off debt, while long-term ones, such as retirement savings, may take several years or longer.
Setting some financial goals that are both fun and rewarding can also be helpful, helping keep motivation high for reaching them when the going gets tough. For instance, when trying to reduce spending and save money, it can be challenging not buying new clothes or going out to dinner; having a goal that encourages saving for something fun can remind you why this decision was made and help keep you on the path of progress.
John Moakler mentions that establishing emergency financial goals, such as creating an emergency fund or savings account, will give you peace of mind should an unexpected expense arise.
5. Make it attainable
Financial goals may seem out of reach at times. Achieving debt repayment and savings goals while living paycheck to paycheck is often impossible, so planning is the key to reaching them. Working with a credit counselor or on your own, creating a SMART strategy (Specific, Measurable, Attainable, Relevant, and Timely) will keep you on the path toward meeting those financial goals.
Budgeting can help make long-term financial goals achievable, which is essential in making them happen. Listing current expenses and income and estimating how much savings might be necessary (i.e., if your goal is to buy a home within two years, saving an amount equaling $200 or $300 each month might help get there).
John Moakler suggests prioritizing short- and long-term goals carefully by considering their benefits, for instance, establishing an emergency fund, trading in your car for something newer and better, etc. Be sure to categorize each as a critical need, want, or both when budgets are limited.
Your money may have an endless list of tasks and goals - debt repayment, retirement savings, emergency fund building, and covering gas and grocery costs are just some of the many that need addressing - it can be hard to keep up! But following this framework for creating, prioritizing, and achieving financial goals may provide the motivation necessary for reaching them!
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