Setting Financial Goals

You’ve flipped the switch on your financial auto-pilot; you see a steady stream of money building up each month; you’re probably itching for the next step. Now what? In this lesson, we’ll discuss setting financial goals.

Having clear goals in mind will keep you accountable to your plan and will help you to figure out how much (and why) you need to save.

What Are You Saving For?

By setting financial goals, you can turn your savings & investment account balances away from just being abstract numbers on a screen into something much more tangible. Each of your dollars will have a purpose:

• Paying down student loans / credit card debt
• Savings for the big trip you’ve always wanted to take
• Home down payment fund
• College savings for your children’s education
• Retirement nest egg

Spend some thinking about what your personal financial goals are. Think immediate (this month), short term (1-12 months), medium term (1-5 years), and long term (5+ years).

Totally fine if your goals are vague rough outlines at this stage. The point is to give yourself something to work towards.

There are worse things in life than saving up a few thousand bucks for one purpose and then changing your mind once you get there.

What If I Don’t Know What My Goals Are?

What if you still find it difficult to sketch out long term plans and goals? Perhaps you’re comfortable with your life now, but have too many uncertainties on the horizon — will I move to a new city? Do I want to have kids down the road? Will I eventually buy a home?

If the view is too hazy to lock down on concrete goals at the moment, I’d suggest setting your sights on attaining “financial independence” — also known as “F-you” money.

A financially independent person is someone who can choose to:

• Refuse to tip-toe around others at work — you can speak up when you feel strongly about something, say “no” to your boss, generally walk a little taller in your shoes
• Ask for reduced working hours or a fully remote job (if that floats your boat)
• Work at a job that aligns strongly with your values, even if this means taking a big pay cut
• Take time off work to re-charge; travel; pursue a passion; make music; play video games; whatever!

To put it more bluntly: once you’ve got enough money you can say “F-you” when, where, and to whom you want. Having more money makes you less dependent on others. More money = more freedom.

The bottom line: Spend some time thinking about why you are saving your money. Set your sights on the goal and make it happen.