How to Set Financial Goals in 2021
Welcome to this post about how to set your financial goals in 2021!
When most of us first hear the word goals, we most likely think of adopting new habits, like working out and bullet journaling. Now, that’s not wrong, but goals are a general term that can be used for more than personal development. Sure, you can have a goal of waking up at 5 A.M. every day, but you can ALSO have a goal of becoming more financially stable. Yes, you can have a goal to start looking on the bright side, but you should also have a goal of educating yourself about your financial situation!
If you don’t already know, finances can be overwhelming and complicated when it comes to managing money and more. However, setting goals helps you successfully manage your money instead of it managing your life. To start off, it is important to actually understand the term “financial goals.”
A financial goal is any plan you have for your money. For example, a budget is your financial goal for this month, while investing for retirement is a long-term financial goal. Your goals should give you focus and keep you accountable.https://www.daveramsey.com/blog/setting-financial-goals
Examples of Financial Goals:
- Building an emergency fund
- Paying off debt
- Saving for a house
- Saving for a vacation
- Saving for retirement
- Starting up a business
Next, it is crucial to understand why it’s important to set financial goals. By having goals, you can change your perspective on how you look at money. You’ll begin to understand how every financial decision matters to your greater financial health. Finances are not determined by luck or any external factor; it’s up to you and only you to educate yourself about finances and your financial situation.
As teenagers, now is the time to truly take control of your finances, your money, and your life. In order to take the next step to become financially independent, you must know how to manage your money. And, what better way to manage money than to set goals? This blog is all about how to set financial goals in 2021, so read on to find out how you can set financial goals and live your life without having to worry about your finances!
1. Find your inspiration
In order to set financial goals, you must start out with why you are setting them in the first place. Think not only about what you want to do, but why you want to do it as well. There must be a purpose behind your financial goal. Even if it just to start keeping a budget or not spend as much at the mall, think about why. Is it to help you become financially stable? Is it to help you be able to provide a better future for yourself?
“Attaching reasons to your goals can put them in perspective and fuel motivation.” (nerdwallet) For example:
- Build up an emergency fund so you can afford to pay rent if you lose your job.
- Get rid of credit card debt so you can put your income toward a wedding instead of interest payments.
2. Examine your situation
After giving it some thought, you may have multiple goals in mind and don’t know what to do next. Or maybe you don’t have specific goals. That’s OK. Looking at where you stand right now can help set you on the right trajectory, whether your ambitions are short term, long term or have yet to be identified.
Start by assessing your income, income tax situation, budget and net worth. “Having an understanding of these four things will help determine goals and prioritization of those goals,” says Steve Martin, wealth planning advisor at Oasis Wealth Planning Advisors in Nashville, Tennessee.https://www.nerdwallet.com/article/finance/how-to-set-financial-goals
3. Make them specific
Making specific goals is crucial to setting and achieving financial goals. You may think that being specific has nothing to do with being good financially, but you would be surprised at how much of an impact they have. In order to set and achieve any financial goals you may have, you must know what you want to do with the money you want to manage. Are you spending, saving, or investing? How are you going to make the money go where you want it to? How much money does the plan involve?
You cannot just say, “I want to be better with money.” That does nothing and is too vague. Make sure to say something like “I’m going to pay off $15,000 of my debt this year.” This will help you achieve your financial goal as you know exactly what it is!
4. Make them measurable
Along with specific, the next part of the acronym is making your goals measurable. Know exactly how much money is needed to achieve your goal.
If you want to pay $15,000 toward your debt in the next year, that means you have to pay $1,250 a month to reach that goal (or about $290 a week). Breaking your goals into bite-sized chunks will keep you motivated when you cross each microgoal off your list.https://www.daveramsey.com/blog/setting-financial-goals
By setting measurable goals, you can measure your progress and reach results. Setting an exact number gives you a measuring stick and a target to aim for. Remember to stay patient, as even though it may seem like there’s a big amount that needs to be managed, if you set goal markers and break them up, you will make big progress in a short amount of time!
5. Make them achievable
Following along with the S.M.A.R.T. tactic, you must also make your goals achievable. This means that you’re not setting the bar way too high, nor way too low, but right in the middle. An achievable goal is one that you can actually accomplish, not one that will leave you behind.
In order to actually set achievable goals, you must understand how important the goal is to you and what you can do to make it more achievable. By doing this, you can change your mindset about money, change your spending habits, and develop new skills. Along with this, setting achievable goals inspires you to keep going after them and improve yourself!
6. Make them realistic
Setting realistic goals is crucial if you want to achieve them, especially if it relates to finances. Make sure you know where you’re at in order to understand where you need to be in the future. In regards to finances, you must know how much money you need to manage, and to help accomplish that, it helps to create a budget.
“You can set a goal of saving $100,000 in 4 months, but if you only make $2,500 a month that goal is not realistic AT ALL. You are only going to set yourself up for failure! Sit down and really think about what it’s going to take to reach this goal and if you’ve set the bar too high.” (advantageccs.org)
7. Make them time-bound
The last part of the S.M.A.R.T. acronym is making your goals time-bound. To be more specific, this means making your goals happen in a certain amount of time. You must know when your goal needs to be reached by. This is important to set goals because (be honest), will you ever complete your goals if they aren’t time-sensitive? Personally, I know I would push the goal back every week or month if I didn’t know when I should have it completed by. Author Benny Lewis said, “There are seven days in a week, and ‘someday’ is not one of them.” Don’t be afraid to give yourself a finish line and adjust it later if needed.
There are seven days in a week and ‘someday’ is not one of them.
So, don’t be afraid to start now and give yourself extra time if needed!
8. Write them down
As written in many, many of my previous blogs, writing is a great way to help accomplish goals. You may think that writing only helps with personal goals, but as you can see, it is also a great way to help with financial goals. There’s something different to write down a goal on paper than to just keep it in the back of your mind – You’re more likely to achieve them. Writing helps you make the commitment of trying to achieve your goal. It also keeps your objectives clear and organized. Be sure to keep it somewhere you will look at often, so that you can be focused and know where you’re headed!
9. Make sure they’re your own goals
Often times, we focus on others rather than focusing on our own self. However, it is important to turn away from that, even when it comes to finances. Sure, it is easy to look at what others are doing and think that it’s fine for us to do it as well. But, when we start comparing ourselves to others, we’re playing a game we’ll never win.
Don’t compare your chapter #1 to someone else’s chapter #20.
Each individual has different situations regarding finances. Just because your friends are taking out second mortages doesn’t mean you should too. Make the best financial choice for YOU; focus on your lane and cross your own finish line!
10. Treat yourself
Setting financial goals are not supposed to be like chores, nor should you act like they are. Reward yourself for making progress and completing objectives. Once you’ve tackled high-priority goals like building an emergency fund, saving for retirement and shrinking debt, you can focus on more exciting goals. These may include making more money, investing more money, and saving more money.
Finances are definitely hard, but by setting goals, you are making the process a lot easier and are also increasing your chances of being where you want be in the future. So, while all of this is happening, don’t forget to enjoy and embrace the process!
By setting financial goals, you can help improve your mindset, your finances, and most importantly, your life. Don’t be afraid to take the next step to help control your finances, as every step goes a long way. It takes dedication to help set a plan and goals for your finances, but more than this, it takes flexibility, patience, and consistency to adhere to your goals and see results. It will definitely not be easy as first, but as with everything, you’ll learn from your mistakes and improve as time goes by!
As a recap, the 10 steps you should keep in mind when setting financial goals are:
- Find your inspiration
- Examine your situation
- Make them specific (S.M.A.R.T.)
- Make them measurable (S.M.A.R.T.)
- Make them achievable (S.M.A.R.T.)
- Make them realistic (S.M.A.R.T.)
- Make them time-bound (S.M.A.R.T.)
- Write them down
- Make sure they are your own goals
- Treat yourself
For more information, I highly recommend checking out the book: The 100-Day Financial Goal Journal: Build a Plan for Your Financial Future. Along with this, be sure to watch this video on 5 steps to setting achievable financial goals by Brian Tracy. Last but not least, if you’re really serious about your finances, check out our spreadsheet for budgeting monthly in 2021!
Remember, if you truly put your mind to it, you CAN achieve these goals. When you’re intention with every dollar you spend, every dollar will stretch further. If you want to live the best life you can, go out and set some goals! There is nothing and absolutely nothing that is stopping you from achieving your financial goals.
I hope this blog gave you the headstart you needed to take control of your finances! Now is the time to take action and start living a financially independent life. After all, the earlier you start, the better. Good luck and I wish you all the best in the world of finances! To end of on a good note…
The goal isn’t more money. The goal is living life on your own terms!
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Disclaimer: We are not experts or certified financial advisers. Our advice for you based on what has worked and continues to work for us. If financial problems occur we are not responsible for them and advise that you speak to a professional. That being said, we believe wholeheartedly that the advice we give to you will help your financial situation greatly.