How detailed do I need to be in setting financial goals?

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  • 3 out of 3 people found this answer helpful

    CFA, CFP® San Francisco, CA

    Your financial goals need to be:

    a. Achievable – you cannot set “win the lottery” as a financial goal. You can, however, say that you wish to pay for your children’s college, retire before a certain age, or buy that nice house in the suburbs.

    b. Measurable- having a “comfortable retirement” may feel and sound good to your ears, but it is too vague. You need to translate that into a recognizable definition. Some people are quite comfortable living in a cubicle with fluorescent lights, while others are thinking “Ritz”. You should quantify it enough detail to say, “I want the equivalent of living off a $150,000 per year in after tax income in today’s terms.” Only then can you work up a realistic plan to reach that goal.

    c. Meaningful – to keep your goals motivating, remember why it is you set them. If one of your goals is to buy a house in the mountains by the lake, try to remember that you want to buy it so that your extended family can visit and create their memories, just as you have memories from your own childhood. You are more likely to have success keeping to your plan this way.

    Some people can naturally visualize what they want for their future in great detail. You, on the other hand, may be constantly changing your mind about goals and switching them every couple of years. That is okay, so long as you do have a process for periodically setting goals, talk them over with your family and friends, and set out to accomplish them. The level of detail is ultimately important, but you can in short order translate a vague goal into a clear one by sitting down for a few minutes and making yourself get more specific (Will you help your children pay for a public university in your state, or can they go anywhere for the best university at which they can get accepted? The difference alone can amount to $40,000 dollars per year!). The important element is that you have a goal or goals in the first place, and are taking action to realize it with a plan.


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  • 4 out of 5 people found this answer helpful

    CFP® Monterey, CA

    Most of us would like to, “spend less” or “save more” but we need to be much more specific if we want to set effective goals. When I work with clients to establish what they want to accomplish, I think in terms of creating goals that are realistic, quantifiable, and have a timeline.

    Realistic goals can help you stay on track because you’ve set a manageable goal so you’re less likely to get discouraged and give up. At the same time the goal should challenge you and help you rise to the occasion . . . it’s a fine line! Fortunately, revising goals is part of the process too.

    Your goal should also be quantifiable. With financial goals this usually means a dollar amount. Then you want a timeline for when you will accomplish your objective. Tracking incremental progress within in your timeline will create a sense of urgency, which is particularly important with long-term goals. You might need to make adjustments so that your goal stays realistic or challenging enough and tracking incremental progress will help you do that as well.

    Here is an example: Bob wants to pay off his sizeable credit card debt of $7,000. He would like to pay this off in one year, which is a total of about $600 per month. He came up with this timeline because he took the time to organize his finances. He examined his spending (and ways he can cut back) as well as look at other goals such as contributing enough to his 401(k) to get the company match. Bob realized that $600 a month for one year was attainable (although, it would take some sacrifice he felt it was worth it). He was excited to make a strategy towards becoming credit card debt-free!

    He began by applying for a zero interest credit card for 15 months and transferred the balance to that card. Bob then set up automatic payments because it is less work for him each paycheck and he isn’t tempted to spend that money elsewhere.

    Additionally, Bob and I discuss the importance of establishing an emergency fund that will eventually include 6 months of expenses ($24,000). When unexpected expenses arise, Bob will have this resource and won’t have to put those expenses on a credit card. This is a separate but related goal that will strengthen his over all finances.

    Creating goals that are tailored to your particular circumstances as well as making them realistic, quantifiable and giving them a timeline will give them the detail you need to be effective. Also, be sure to add motivation. Who will offer support along the way? How will you celebrate or reward yourself when you accomplish your goal?


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    Advisors offer free consultations to determine if you're a good fit for one another. Providing more information in the consultation request will help advisors have a better sense of what you're looking for. The advisor will contact you via email and set up a time to meet. Depending on the advisor, and your preferences, this could be an in-person or online meeting. You are under no obligation to engage them after meeting with them.
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