Without a doubt, not many people would claim 2020 as their best year. In fact, the pandemic has left many people feeling anxious about their financial future. However, even with facing financial challenges, most Americans feel optimistic about their finances for 2021. So, you know what that means? Time to set some financial goals for 2021!
But where do we begin? After all, you may have attempted to set financial goals only to fall flat.
Why is that?
To tell the truth, I don’t think most people know how to set goals properly. I’ve encountered people with goals that are either too vague or even totally unattainable.
For example, I once coached someone whose goal was simply to not become homeless. Another had the goal of paying off $100,000 in student loans in less than a year…on a $1,200 monthly income…Okay…
Therefore, I recommend taking a look at how to set realistic, attainable, yet challenging, financial goals.
Wondering how that works? Keep on reading and I’ll show you!
First, Some Resources for You
Maybe one of your goals for 2021 is to get out of debt, but you don’t know where to start. Well, I have a resource that just might help you! Best of all, it’s completely FREE!
I wrote a 23-page eBook on how to get out of debt. It’s a simple, step-by-step guide that anyone can use. Just enter your email below and I’ll send it right to you!
Now, it’s time to take a look at how to set financial goals for 2021!
How to Set Financial Goals for 2021
So, do you want your money to tell you what to do? I hope not. Instead, I want you to be in control of your money.
Setting some financial goals can help you do that. Furthermore, having a few goals will give you something to aim for. After all, if you aim at nothing, you’ll hit it every time.
In other words, setting goals will help you set your mind towards accomplishing something. And I can tell you from experience that financial success doesn’t happen by accident.
Just like anything else, it takes intentionality.
What are Financial Goals?
To put it simply, a financial goal is a specific plan for your money. They can also be short-term, long-term, or recurring.
For example, saving money to go on vacation next summer would be a short-term goal. Reaching $1,000,000 in your retirement account is a long-term goal. Finally, sticking to your monthly budget would be a recurring goal.
Here are some other examples of goals you might want to accomplish:
- Getting out of debt
- Building an emergency fund
- Saving 15% of your income towards retirement
- Saving for Christmas
- Increase your generosity
However you look at it, financial goals giving you something to shoot for. They keep your mind and your spending on track.
That way, when you feel tempted to buy Starbucks every day, you can keep your goals in mind.
Why Should I Set Goals?
I think the bigger question is why shouldn’t you set financial goals? If you want your money to control you rather than the other way around, then don’t make goals!
In all seriousness, when you set a financial goal, it changes how you do your finances. Financial goals help you stay focused on maintaining your financial health.
For example, let’s say you’ve had the habit of eating out five times a week. Each time you eat out costs you $10. That comes out to $50 a week. Or, if you want to look at the bigger picture, $2,600 a year.
Now, let’s say you decide to set a goal of investing $150 a month. However, in order to reach this goal, you’ll have to cut back on some of your restaurant indulgences. So, you grit your teeth and make some cuts.
Five years later, assuming a 10% return, you find you have $11,484. Not bad! After 10 years, you have nearly $30,000. Then after 15 years, nearly $60,000!
As you can see, giving up eating out a few times a month can result in major gains.
And the same principle works for other financial goals as well! Setting goals will help you gain momentum and stay focused on your overall financial well being.
7 Steps Towards Setting Financial Goals that Actually Work
Now, let’s take a look at setting financial goals that actually work. After all, we don’t want to get all wishy-washy!
1. Know Your “Why” for Each Goal
First and foremost, you need to know your “why” for each of your goals. Otherwise, you’ll find yourself chasing something for no reason.
For starters, think through what will truly motivate you. Personally, I have a strong reason for each of my goals.
For example, one of my deep desires is to pay for my children’s education. I picture myself taking my daughter out on one last daddy-daughter date before she goes to college. We talk, laugh, and reminisce about the years that brought her to this point. Finally, our careful planning has paid off and our daughter will graduate debt free.
Of course, this hasn’t happened yet. But it does motivate me to be careful with my money.
Therefore, I encourage you to create a vision as you move forward with creating your financial goals. This will help you keep your eyes on the things that are most important.
2. Write Out Your Goals
Yes, that means it’s time to get out the notebook and write them out! Put them on sticky notes, laminate them, make them into posters, or whatever suits your fancy.
This way, your goals are always in a place you can see them. After all, the last thing you want to do is forget your goals!
Not only that, but you’re also more likely to achieve your goals if you write them out. And putting them where you can see them will help you stay focused.
3. Make Your Goals Specific
Below are two goals. As you read them, think on which one is more specific.
Goal A: I want to improve my finances.
Goal B: This year, I will invest 15% of my total gross income into retirement.
Hopefully, you said Goal B is more specific.
If you’re too vague with your goals, you’ll find yourself aiming at nothing. And if you aim at nothing, you’ll hit it every time.
So yes, you want to do better with your finances. But guess what: everyone wants to do better with their finances.
Therefore, the question is how do you want to do better with your finances. What will you do to do better with your finances? Pay off a certain amount of debt? Invest a certain amount per month? Set a monthly budget?
Either way, start thinking through what you want to accomplish and make specific goals.
4. Make Your Goals Measurable
“I’m going to increase my savings.” Great! How much?
Sure, life’s not all about the numbers. But if you don’t attach numbers, you’ll find it difficult to measure your progress.
So, let’s say you want to pay off $24,000 in debt. How will you accomplish that goal?
One thing that helps is to break it down. Paying off $24,000 in one year means you need to pay $2,000 a month towards your debt. With that in mind, you can make sure the goal is within your reach.
5. Make Your Goals Attainable
Let’s revisit the goal of paying off $24,000 in a year. This goal could be a very attainable goal under the right circumstances. But if your income is only $31,000 a year, you may not find such a goal attainable.
Therefore, you’ll have to find some ways to increase your income significantly!
But let’s say you’re just not able to double your income and pay off $24,000. That’s okay! Just make some adjustments to your goal to make it more attainable.
Perhaps you find yourself able to pay off $15,000 after increasing your income. That’s still a pretty honorable goal!
Just make sure you can realistically obtain your goals as you set them.
6. Set a Time Limit
This is a harder aspect of setting goals. For me, it’s one of the most intimidating. However, as Chris Hogan says, “Someday isn’t a day on the calendar.”
You need to make your goals time-bound to keep yourself focused. If you say you’re going to pay off $24,000 of debt within a year, I’d say that should light a pretty good fire under you!
Conversely, you’ll find it difficult to actively pay off debt if you just say “eventually.” Instead, challenge yourself and add a time limit to your goals.
7. Budget for Your Goals!
Anyway, I tell you this to make sure you have a plan for your goals. And successful goals begin with having a monthly budget!
Without a budget, you won’t be able to plan how much you need for your goals. Also, lacking a budget is a lack of intentionality.
Face it. You need a budget in order to win with money. Therefore, start planning your budget and start planning your goals today!
Goals Can Help You Achieve Your Dreams
Do you want to build wealth, pay for your child’s education, or get out of debt? Then you need to set financial goals!
After all, this is all about intentionality. When you start to become intentional you’ll find yourself reaching your goals more often.
You’ll also find yourself able to do more than you ever thought possible.
This is the time for you to start taking control! Go ahead and take some time to start setting your financial goals for 2021!
If you need some help with some of the logistics, I recommend checking out my FREE 23-page eBook. This step-by-step guide will show you how to get out of debt, budget, build an emergency fund, and more. Just enter your email below and I’ll send it right to you!