How to achieve your financial goals

August 1, 2023

It's always a great time to set financial goals.

But setting goals is one thing. Accomplishing them is another.

I'd get excited every new year and set ambitious goals only to never achieve them because:

  • They were too difficult
  • I'd forget about them
  • I refused to alter them

Last year I achieved 90% of my financial goals using the framework below.

I'm not bothered by the 10% of my financial goals I didn't achieve. I think it's important to have "reach goals".

And I aim for an 80% success rate, not 100%.

100% is impossible while 80% keeps me consistent.

So, how do you set effective financial goals?

1. Make them SMART.

SMART goals are Specific, Measurable, Attainable, Relevant, and Time-bound.

Instead of setting a vague goal like "save more money," try setting a specific goal like "save $10,000 in my emergency fund by December of this year."

This goal is:

  • Specific: saving $10,000
  • Measurable: it's obvious when you've hit this goal
  • Attainable: assuming you have the income and can cut back on expenses to reach this target
  • Relevant: an emergency fund is a crucial component of financial security
  • Time-bound: you have a clear deadline of December 2023

2. Write them down.

Studies show you are 42% more likely to achieve your goal if you write it down.

Take a few minutes to write down your financial goals for this year.

Keep them somewhere visible, like on your fridge or in your planner, so you can remind yourself of them regularly.

3. Make a plan

Now that you have your SMART financial goals written down, it's time to make a plan to achieve them.

Break your goals down into smaller, actionable steps, and schedule them.

If your goal is to save $10,000 in your emergency fund, set a monthly savings target and track your progress towards this goal using a spreadsheet or budgeting app.

$10,000/12 months = $833/month

The best way to achieve this goal is to make it automatic.

Set up an automatic monthly transfer to your emergency fund and never think about it again.

But be sure you have the necessary income to do this.

4. Review and revise

As you work towards your financial goals, it's important to regularly review and revise them.

Life is full of surprises:

  • Job loss
  • New child
  • Promotion
  • Moving cities
  • Car dies
  • Furnace goes out

Don't be afraid to adjust your goals as needed to reflect a change in your situation or priorities.

If you follow these tips, you'll be that much closer to financial freedom by the end of this year.

Remember, the key is to be consistent.

Don't let a bad day or month stop you from reaching your goals.

If you need to make your goals easier then make them easier.

Financial freedom is reached with small consistent habits, not drastic unrealistic changes.