Money drives many decisions that we make day to day. Setting goals can help us take control and feel more confident about those choices.
Ready to get started? First, learn what financial goals are and why they’re important.
What are financial goals?
Financial goals are the personal, big-picture objectives you set for how you’ll spend and save money. They can be things you hope to achieve in the short term or further down the road. Either way, it’s often easier to reach your goals if you identify and plan for them in advance.
Examples of financial goals
Examples of financial goals include:
- Paying off debt.
- Saving for retirement.
- Building an emergency fund.
- Buying a home.
- Saving for a holiday.
- Setting aside money for a home renovation.
- Starting a business.
- Feeling financially secure.
- Getting to a position where you’re comfortable investing.
- Making more money.
Think about what’s important to you as you begin to set goals. It’s completely normal to strive for multiple goals and for them to change over time.
Why financial goals matter
Having financial goals can help shape your future by influencing the actions you take today. For example, say your goal is to pay off a large credit card bill. You might cut back on takeaway dinners and use the money you save to make extra payments instead. Without establishing that goal, you’re more likely to continue spending as usual while your debt piles up.
Like all expenses, financial goals should be included in your budget. That way, you can take concrete steps toward reaching them while leaving room for other costs. Plan out how long it will take to reach each goal and how much money you’ll need to contribute within that period.
Identifying goals and creating a realistic plan for them allows you to track progress and can motivate you to keep going. Even if you fall short, you might develop some healthy money habits along the way.
If you’re in the United States, read this article on the NerdWallet US site.
How you save for a deposit and how long it takes you will be a good indicator not only of how well you manage your finances but how much you can realistically afford in regular mortgage repayments.