How to set money goals


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There’s no doubt about it: thinking about money is stressful. In fact, a study shows that money outpaces both personal relationships and work when it comes to inducing stress.


But not thinking about money can be even worse, as you’ll know if you’ve ever seen “transaction declined” after you swipe your debit card or have faced an urgent car repair with no way to pay for it.


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Setting smart money goals might help you avoid those “oh shoot” money moments in the first place. But how exactly do you go about setting—and more importantly, sticking to—those money goals?


Related: Partial payments for debts

Assessing your finances

When you’re ready to commit to implementing some new money goals, one first step might be figuring out exactly what your current finances look like. Sure, you probably know how much your paycheck is each month, but do you know exactly how much is going towards your retirement savings every pay period or exactly how much you’re spending on food delivery? Keeping a close eye on your finances might help you set smarter money goals.


It might seem easy to ignore the finer details of our finances in favor of blissful ignorance, but failing to know where you and your money stand might harm your financial health down the line. So if you haven’t looked at where your money is going in a while, taking a look at how much money you’re bringing in, how much you’re spending, and how much you’re saving might help you set more meaningful money goals. Taking a close look at bank statements, credit card statements and even online banking records can help you determine where your money is going every month.


In addition to adding up just how much you’re spending on pad thai delivery every month, writing down big numbers like credit card, personal loan or student loan debt can help you plan for payoff.


Your money accounts might be able to help you with this.

Figuring out what is most important to you

Once you have a snapshot of your overall financial situation, it can be worthwhile to spend some time reflecting on what is important for you and your money.


While there are many things we know we ideally should be saving for, like a down payment on a house or retirement, your financial goals might not be the same as those of your mom or your coworker. You’re unique and so are your money goals. For example, you might want to pay off student debt as fast as possible in order to free up more cash every month, or you might be working toward public service loan forgiveness and not be as focused on quickly paying off student loans. Perhaps your goal is to save up an emergency fund or take a vacation in six months.


Some people might find it helpful to spend some time journaling about what is important in their lives when it comes to money. Some people may have a clear idea about their money goals already. If you’re looking for help brainstorming money goals, here are some goals to consider:

Saving an emergency fund

Whether you’re easily covering your monthly expenses or grabbing change from the bottom of your bag to buy a coffee at the end of the month, many people are living paycheck to paycheck. But what if that paycheck disappeared or if you had a large, unexpected expense? Enter the emergency fund.


Stashing away an emergency fund might help you comfortably weather a “company-wide restructuring” that eliminates your position, or an unexpected illness that cuts into your freelance earnings.


Consider a long-term goal of setting aside about three to six months’ worth of expenses to help you weather any rough financial waters that may lie ahead.

Paying down credit card debt

High-interest credit card debt can feel like a treadmill: you keep putting in more and more effort seemingly without getting closer to the finish line.


If you have credit card debt, making a pay-off plan instead of focusing on those minimum monthly payments could potentially help you stay on track with your finances.

Putting more towards retirement

Most of us know we should be saving for retirement, but that can be easier said than done when there are so many competing places to put our money.


The good news is that when you’re saving for retirement, even small amounts can grow over time, which makes saving for your golden years a great financial goal.

Establishing a fun budget

Okay, but what if you just want to go clothes shopping once a month without feeling guilty or take that Budapest vacation you’ve been dreaming about?


Money goals are designed to work for you, which means that planning out your discretionary spending might not only help keep your finances on track but can also help you inject an extra fun quotient into your life.


But whether you’re focused on saving up for a down payment on a house, or a trip to Disneyland, you won’t get there without a plan.

Staying on track

Once you’ve decided on a money goal or two, it’s time to put a plan into action. Seeing where your money is going might help you stay on track.


Your plan will vary depending on whether you’re tackling a long-haul climb out of credit card debt or saving an emergency fund, but whatever your financial goals, there are tools that can help you along on your financial journey.


Managing money can feel stressful, but making smart money goals can help you stay financially healthy—and help take care of some of those financial worries.


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Tips for creating a financial plan


It’s time to talk about the big picture for a minute, so close your eyes and imagine your future. What does it look like? Are you sitting poolside, sipping margaritas while someone else takes care of your property?

Maybe you’re in an apartment at the heart of New York City, within walking distance to all the greatest shows and restaurants. Or maybe you simply want to have enough money to fully retire — no part-time gig needed.

A financial plan is not just another word for budget or debt-reduction plan. It’s the long-term roadmap that could help make your vision a reality. The smaller pieces, like budgets and debt-payoff strategies, are tools to help you get there.

And whether you sit down with a financial planner or do it yourself, putting pen to paper and writing down not only what you want, but how you plan to get it, could help take it out of your head and make it real (if you’re the creative type, you might even consider a vision board).

Related: 50/30/20 rule demystified


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While everyone’s financial goals will be different based on their individual situation, these three tend to rise to the top of the list.


Many recommend a goal of three to six months worth of living expenses. It might help cover those unexpected expenses that show up, or float you through a loss of income, without wrecking your plan.


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Contributing at least as much to your 401(k) that your employer is willing to match at 100% is akin to doubling your money. Combine that with the magic of compound interest, and you could see your balance grow at a nice pace.


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It’s no secret that eliminating your credit card debt could not only save you thousands of dollars in the long run, it could also help improve your credit score.


While those are certainly important, they’re not the entire list. Some other financial goals that might make sense to you could include these five things.




If your dreams include large purchases, or even starting a small business, a bad credit score can be a deal-breaker. The minimum number needed to buy a home, for example, currently sits at around 620 for a conventional loan (if you’re struggling with bad credit, there are ways to help increase your score).


If this is one of your financial goals, you likely share it with more than 44 million of your closest friends. And while a student loan is generally considered “good” debt, it still accrues interest. It’s also a potentially large chunk of money that could go toward other areas of your plan.




Conventional wisdom suggests you shouldn’t borrow more than you can afford. If you think you may need to borrow money, you could begin with a reality check to decide if you can afford to pay off the debt. If not, you may want to consider saving money until you can.


No one can predict what the higher-ed landscape will look like when your kids are ready to start filling out applications. But we do know that the average costs for tuition and fees for a public college are hovering at just over $10,000 and are currently increasing at a rate of 3.1% over inflation.


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This might include items like your 401(k) and IRA, but it can also mean a foray into the world of stocks and mutual funds. Becoming a smart investor can not only be a goal by itself, but a way to achieve many of your other goals.


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The goals that you choose as part of your financial plan may be on vastly different timelines, and you may need to accomplish one before you can move on to another.

One way to stay focused is to remember that you’re in it for the long haul, and huge changes probably aren’t to happen overnight (unless you win the Powerball, of course).


Knowing exactly what you have to work with might be one of the most important keys to building a plan that works. To put the entire puzzle together, though, you’ll need to find all the pieces.

One way to get started is to gather up all your paper and electronic bank statements, billing accounts and portfolio documents You might also consider storing all your passwords in one place while you’re at it, because, let’s be real, remembering all your logins might be the hardest part of this whole process.

So, what are you looking for? The details on where your money is, how it’s moving and whether it’s working for or against you. This might include:

•   Income: Salary, investment income, alimony, monetary gifts
•   Expenses: Bank debits, monthly billing statements and other sources of everyday spending
•   Assets: Savings accounts, home equity, or physical items you own (your house, car, collectibles, etc.)
•   Liabilities: Credit card debt, student loans, mortgage(s), and any other sources of debt

The next step — categorizing spending — might be one of the most challenging due to the ever-changing nature of monthly expenses. But, you’ll likely thank yourself for putting in the work later.

However you choose to organize your finances, you might want to consider a method that feels natural rather than trying to force yourself into a pre-set structure. You might be more prone to let all your hard work go idle if you just don’t like the system.




If the organization is the outline of your financial puzzle, then creating and analyzing your working plan is like filling in the center. If a piece doesn’t work one way, you can turn it around and try something different.

For example, if your 401(k) continues to grow at its current rate, and you continue to contribute the same amount each month, how much will you have at age 65? What if you push your retirement until age 67, or increase your risk-tolerance on your retirement accounts?

Or, if your debt will take too long to pay off using the snowball method, might another strategy work better? You could keep an eye out for areas in your plan that fall especially short and consider giving them some extra TLC.

With a lot of diligence and “if this, then that” tinkering, you may soon find yourself looking at a realistic, workable financial plan.




But if the picture just isn’t coming together, don’t forget that DIY doesn’t mean do it alone. If you look around, you’re likely to find quality, no- or low-cost expert advice that could help ensure you’re on the right track.

Your employer may offer access to planning tools, for example, as part of their employee benefits package. A number of low- or no-cost services may also be available to you, such as the Association for Financial Counseling and Planning Association.


Did you think you’d get through an entire article on how to make a financial plan without one mention of the “b” word? Here it is — the part where you create a budget that helps you implement your plan.

If saving is your ultimate goal, one helpful way to create a solid budget is to track every cent to the penny. Understanding your spending habits could be an effective way to control them.

You might also want to stick to some of the basic tenets of personal finance, like paying your bills on time, keeping one eye on your credit report and choosing your financial institutions wisely.


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It’s been a few months since you implemented your financial plan, and so far, so good. But things may have changed a bit.

You paid off one credit card, so you need to reallocate that payment to the next debt. Or, a goal that used to be at the top of your list isn’t so important any more.

Reviewing your plan can mean not only making adjustments, but simplifying. This can include automating any new payments, consolidating new debts, or opting out of paper statements to reduce clutter.

Learn more:

This article originally appeared on and was syndicated by

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