The Key to Making Your Financial Goals Happen
by Lyle Daly | Feb. 13, 2021
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Not making much progress on your financial goals? There could be a simple fix.
Reaching your financial goals can be a challenging and frustrating process. You start by telling yourself you're going to buckle down and save more, pay off debt, or increase your retirement fund. A few months pass, and you find that you're basically still right where you started.
I know exactly what it's like, because I used to be terrible at saving money. I'd tell myself it was time to start saving. I'd try to put away whatever extra money I had left every month. And then I'd be so disappointed when my bank account balance never improved.
Fortunately, I managed to figure out that there was one change that made a world of difference. All it took was getting more specific about what my goals were and my timeline for accomplishing them.
Why being specific is the key to reaching your financial goals
The reason that being specific is so important when setting financial goals is because it gives you a clear target to work toward. This makes it easy to monitor your progress and confirm that you're staying on track. It also helps you stay motivated when you know that your success depends on being consistent.
Imagine that you want to boost your emergency fund this year, and you decide $3,000 will be your goal. To get there, you'd need to deposit $250 into the account every month. There's no ambiguity over whether you're successful or not. By setting a specific goal, you know that the only way to hit the $3,000 mark is to stay disciplined with those monthly deposits of $250.
You can't do the same with vague goals like my old favorite of trying to simply "save more money." I didn't set a specific amount to save, so I had nothing to work towards. And I didn't give myself a time limit, so there was no motivation to improve my spending habits that month or the next one, and so on.
How to improve your financial goal setting
If you haven't been setting specific money goals, it's not hard to improve them. You just need to figure out a target and a timeline to reach it. Based on that, you can break down your goal into actionable steps. That gives you smaller markers to reach along the way.
Here are a few examples of common financial goals and how you could make them better:
- Save more money: Add $1,000 to your savings accounts in one year by saving $84 per month (just under $20 per week).
- Pay down credit card debt: Move your credit card debt to any of the top balance transfer cards with a 0% intro APR for the first 18 months. Pay $300 per month for the 18-month intro period and reduce your debt by $5,400.
- Build a retirement nest egg: Max out your IRA contributions by depositing $6,000 per year ($500 per month).
When you set your goals, they need to be both realistic and challenging. You don't want a goal that's impossible to attain. That saps your motivation before you even start. If you know a goal is out of reach, you probably won't keep at it for long.
But you don't want a goal that's too easy, either. You won't make nearly as much progress as you could have if you'd challenged yourself.
Being more specific about financial goals can be a gamechanger. If you haven't had much luck with your goals in the past, this adjustment could be exactly what you need.
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About the Author
Lyle is a writer specializing in credit cards, travel rewards programs, and banking. His work has also appeared on MSN Money, USA Today, and Yahoo! Finance.
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