Updated Sep. 22, 2019. Originally posted Jul. 9, 2013.

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What are Financial Goals?

The first thing we have to do today is establish what we’re talking about.  We’ve already discussed budget, so what are financial goals, and how are they different?  Well, you’ll want your financial goals integrated into your budget as you finish them up, but these are separate in that they are things you’re working toward that require a greater financial investment than your monthly budget accommodates.  In other words, you need to save up for them.

Now, although debt reduction can definitely be a financial goal, for today’s purposes that doesn’t count.  (We’ll talk specifically about debt reduction next week, so ignore it for today.)

You might want to go back to school, save for a new car, go on vacation, etc.  These are financial goals.

(You could also have financial goals that have to do with increasing your income.  That’s a different kind of financial goal, and you probably tackled it back when we talked about goals.  Those goals can be helpful, though, in reaching these goals!)

STEP 1: List anything you want to save for, anything you want to spend money on that’s a larger chunk than can be readily accommodated by your routine budget.  Be sure to include amounts.

STEP 2: If there is more than one, determine whether it’s reasonable to work toward a couple of them simultaneously, or whether you need to focus on just one at a time.  Decide which one(s) you’re going to pursue first.

STEP 3: Consider the ways you might work toward your goal. 

Do you have any wiggle room in your budget, that would allow you to budget a certain amount every month/paycheck to set aside toward the goal?

Are you going to designate “slush fund” money (anything in a budget category that doesn’t get spent on that category for the month) toward the goal?

Are there ways you can make a little extra money to put toward the goal?

STEP 4: Create a plan, and write it down.  Put it with your other financial information so you can see it regularly.  And, of course, begin to implement the plan!

If you’re just stumbling across this, please click here for the other posts in the series.