How To Set Financial Goals for 2019
When setting financial goals for 2019 – or for any year – it is important to know that the process begins with an abundance of thoughtful planning and a subsequent writing down of all realistic financial goals.
Written goals of any type are more likely to become actualized than unwritten goals, and since achieving financial goals requires a strong measure of self-discipline and sacrifice over a period of time, putting financial goals down on paper is the first step toward creating the financial future you desire.
Your financial goals must also be realistic enough so that you can track your progress over time and make necessary adjustments as they arise. Let’s take a closer look at what’s involved in setting and achieving realistic financial goals.
Setting Financial Goals
Setting financial goals and staying on track to achieve them requires commitment and sacrifice. For example, when our goals involve saving a certain amount of money within a certain amount of time, by definition successfully doing so requires reigning in spending on certain items and categories – you simply won’t be able to buy everything you want if you’re to hit your savings goal.
A key ingredient, therefore, to the goal setting process is to be keenly aware of the powerful reasons why it serves you (and your loved ones) to muster up and maintain the discipline necessary to attain financial goals. Reaching financial goals involves hard work and it could also involve making extra income even while cutting back on spending. Powerful “whys” make doing the work necessary to hit financial goals more possible.
Why is Goal Setting Important?
Let’s take a step back for a minute. We’re talking about financial goals specifically – but why is setting goals important, anyway? The primary reason is that goals provide a compass, a direction to steer toward.
Though a person lacking goals may fall back on enjoying day-to-day life with possibly fewer cares and responsibilities, inevitably the future self pays the price when a day of self-reflective reckoning arrives.
Having clear, realistic goals prevents us from boarding the slow boat to nowhere and instead focuses our attention, allowing us to think creatively toward constructively tracking our ongoing progress and achieving our goals. Simply put, goals keep us motivated and reduce the probability of experiencing mediocrity or failure within our lives.
Long-Term Financial Goals
Many large financial goals – such as saving for retirement, a down payment on a house or a child’s college education – can take years (or decades) to fulfill. Even though the future may appear shadowy and distant, it is important to respect and plan for its inevitable arrival.
You need to zoom out and have a vision of what your desired financial situation looks like ten to twenty years from now and plan accordingly. Get specific.
Will you own a house? How much mortgage debt will you have remaining? How much will you have saved for retirement? Are you debt free? Will you have maintained an emergency fund throughout the years? How large? Do you have children?
If so, how much will you have put aside for their higher education needs? These are all big financial goals that may not connect much to the present day, but having clear and written long-term goals prevents one from falling into bad habits today that erode the possibility of achieving long-term financial well-being and peace of mind in the future.
Short-Term Financial Goals
Think of short-term financial goals as subsets of your bigger, long-term financial goals. Short-term goals are necessary because attaining them provides interim victories that also make it easier to measure progress as you gradually and successfully move forward on the path of your long-term goals.
Quick victories spur on continued motivation, so, for example, a shorter-term goal to save a certain amount toward the down payment of a house within three months is measurable and effective in preserving direction toward the longer-term goal toward saving a much larger amount for the down payment within five years or more.
Both goals are necessary, and without the short-term savings goal it becomes harder to measure progress and stay on track toward the long-term savings goal. Short-term financial goals, therefore, are effective in “chunking down” long-term goals – they keep us on track and motivated while substituting any possible feelings of overwhelm with feelings of success.
Realistic Financial Goals
In order for your financial goals to be realistic, they need to be specific, measurable and attainable. Let’s break this down. Having specific financial goals brings in the relationship between short-term and long-term goals, as well.
For example, writing down the specific goal of saving $40,000 over the next five years toward your child’s college education is better than simply holding some vague idea in your mind about saving for college. When we get specific, we can chunk things down – here we know we’re talking $8,000 per year, and this breaks out to $667 per month.
Sizing our goals will always be a function of our income and written monthly budget (You do have a written monthly budget that lists all sources of cash flow and itemized expenses, right?), so it only makes sense to choose realistic numbers within the context of your monthly budget. Choose figures that represent realistic targets only!
Regardless, in this example, it becomes far more measurable to track whether we are saving the targeted $667 per month each month. If we are, great. If we aren’t then we must determine whether it’s a matter of discipline or if the targeted figure was unrealistic to begin with.
Our goals should be attainable, so that we stay motivated and have hope in achieving them. Make adjustments accordingly! Curb spending, pick up a side hustle if necessary – or lower your goal to a more attainable level if it’s truly unrealistic given your personal financial situation
Common Financial Goals
Common financial goals include saving for retirement, saving for a down payment on a house, assembling an emergency fund, saving for a child’s higher education, saving for the purchase of a car in cash, and getting out of debt.
All of these financial goals are long-term in nature. For an emergency fund, it’s important to have a minimum of three to six months of living expenses put aside for unexpected expenses or employment disruption. Remember that for all of the above financial goals, it is important to get a handle on a realistic targeted amount and time frame, and to arrive at monthly figures accordingly.
The approach to take for all of them is to chunk them down into short-term goals after determining the realistic attainable amounts that you desire to save for each based on your current and foreseeable financial situation. Some goals may take precedence over others, as well. Saving for retirement and getting out of debt are sensible to prioritize over saving up enough to buy a car in cash, for example.
Remember to establish powerful “whys” for your financial goals, as they will involve commitment, sacrifice and discipline to execute over the long-term. In the meantime, enjoy your short-term (monthly, quarterly, or even yearly) victories and cherish them for the motivation they bring in keeping you on track to hit your long-term financial goals.
About The Author: Steven Brachman
Steven Brachman is the lead content provider for UnitedSettlement.com. A graduate of the University of Michigan with a B.A. in Economics, Steven spent several years as a registered representative in the securities industry before moving on to equity research and trading. He is also an experienced test-prep professional and admissions consultant to aspiring graduate business school students. In his spare time, Steven enjoys writing, reading, travel, music and fantasy sports.
Handling my business debt was not something I looked forward to
Handling my business debt was not something I looked forward to. But United Settlement was so patient with my questions and helped me figure out how to handle my debt as a small business owner. I qualified...
I didn't even know what type of interest rates there were and how those affected my debt overall
When I contacted United Settlement, I didn't even know what type of interest rates there were and how those affected my debt overall. So, when I went to go buy a new house, I was shocked to find out that...
Debt settlement is what we signed up for when we were interested in using United Settlement
Debt settlement is what we signed up for when we were interested in using United Settlement. We needed a company to negotiate on our behalf to help us reduce the total amount of debt we owed, and we were...
I had no idea that I could lower my credit card interest rates. But when I contacted United Settlement, they explained to me that I could negotiate my interest rates down lower along with my payoff balance....
If you have ever had an unmanageable amount of credit card debt
If you have ever had an unmanageable amount of credit card debt, you know how ridiculous it is to try to pay it off. In my situation, I did not want to wait until the last moment to get this debt under...
Medical debt is damaging to your long-term credit
Medical debt is damaging to your long-term credit. That is what we were dedicated to managing our debt as soon as we got our medical bills from an unexpected surgery that our insurance did not cover. I...
Finding a good alternative to business debt relief is far from easy
Finding a good alternative to business debt relief is far from easy. As a company, we have spent years trying to find a good solution to our business’ debt, because if we can get it out of the way we...
I had no clue that a debt consulting company could provide guidance
I had no clue that a debt consulting company could provide guidance and what type of loans you should take out. I was thrilled by the communication I had with United Settlement. They did not hesitate to...
Buying a new vehicle should not stress you out to the point that you cry every night to go to sleep
Buying a new vehicle should not stress you out to the point that you cry every night to go to sleep. But that was the point I was at before I contacted United Settlement. These guys were professionals at...
I knew I needed to file bankruptcy before I even contacted the team at United Settlement
I knew I needed to file bankruptcy before I even contacted the team at United Settlement. My biggest issue was how to file and also what type of bankruptcy I should file. A lot of people do not know that...
Who would have thought that auto loan debt can take such a toll on a family
Who would have thought that auto loan debt can take such a toll on a family? Well, we discovered how that could happen when our family bought two new vehicles. We thought we could afford the payments, but...
Why go bankrupt when you do not have to?
Why go bankrupt when you do not have to? That was my thinking when I decided to hire United Settlement. I wanted them to help me get out from underneath my credit card and auto loan debt. They were very...
Who knew that you could get credit card debt relief
Who knew that you could get credit card debt relief just by reaching out to a credit card consolidation company? I did not. But I had a friend recommend United Settlement to help me get through my debt...
We had a revolving credit card debt that just wouldn’t quit
We had a revolving credit card debt that just wouldn’t quit. This in turn made it difficult to try to buy a house. Our credit card debt literally held us back from moving forward in life. But our goal...
There comes a time when you realize you need help with your debt consolidation
There comes a time when you realize you need help with your debt consolidation. And that time came for me last year. I contacted United Settlement to help me manage my debt issues. They were friendly and...
Small business loan debt was crippling our company.
Small business loan debt was crippling our company. We have spent many years building our business, but we had to take out several loans to get through a slow period. Fortunately, those loans helped, but...
If you have ever run a business before, you know how quickly you can get into debt
If you have ever run a business before, you know how quickly you can get into debt. That’s right, you can be trying to live your best life and end up in a situation you cannot get yourself out of. That...
Our credit card interest rates were astronomical
Our credit card debt was not really that bad, but our credit card interest rates were astronomical, which meant we could not get out from under our debt as quickly as we would have liked. We used United...
I had no idea that I would qualify for business debt consolidation loans
I had no idea that I would qualify for business debt consolidation loans. But United Settlement walked me through what that process was like and gave me insight into how to manage my future debt so that...
The last thing I wanted to do is file for business bankruptcy
The last thing I wanted to do is file for business bankruptcy, but that was before I knew how common it was and how little it actually affected my personal credit. United Settlement informed me of that...