Financial Goals

Budgeting without goals is like driving without a destination: you feel like you’re going somewhere, but you don’t know where, and you’re not sure why. Sure, it can be nice, but how long are you going to stick with it before you wonder what the point is, go home, and order takeout?

On the flip side, budgeting with goals in mind allows you to keep your eyes on the prize. Are you going to shop ‘til you drop? Not unless you feel like pushing that winter trip to the Bahamas out until next year. Do you want to grab that second latte every day? You’ll think twice when you remember that loan you’re trying to pay off by the end of summer. A good financial goal makes short-term sacrifice easy, because it is for a purpose that brings you long-term satisfaction.

So what makes a good financial goal? The acronym “SMART” summarizes it well.

Specific: There is a big difference between a plan to pay off “A lot of debt” and a plan to pay off your car loan. Getting specific is the first step towards making a good goal.

Measurable: How much is your car loan actually valued at? Keep in mind that there are costs associated with interest, so make sure you use our loan calculator to figure out how much you’ll really need. Thinking of vacationing? Use our vacation budgeter to figure out how much you’ll be spending over the cost of hotels and lodging. You’d be surprised at how much it adds up.

Attainable: The easiest way to quit on a goal, and often to quit budgeting entirely for a time, is to set a goal that is unattainable. Meaning, if you want to be a millionaire, you might want to set a goal to save ten thousand dollars first. And if a goal you thought was attainable turns out not to be, don’t despair! You can always adjust your goals later to make them work.

Relevant: Is this something you really want? After looking through all of your goals, you may find that some don’t quite fit your needs at this time. If you’re saddled in debt and you have to make a judgment call about whether to pay down your debt or go to Hawaii, you may decide that paying down debt is more relevant to your financial wellbeing. A modest trip to Maine may be more up your alley, and you’re setting the stage for prosperity that will make your Hawaii trip more relevant in the future.

Time-bound: We have a saying, that a goal is a dream with a deadline. If you want to do something, you’re only making dreams, until you set a time frame. Setting a time frame not only allows you to make regular payments towards it every paycheck and every month, but it also helps you to figure out how attainable your goal is. Again, if it turns out that it’s unattainable, you can push the deadline further out!

Try our Financial Goals Planner today to help you get started. With automatic, detailed calculations that even allow you to determine how loan interest and savings interest rates help or hinder your goals, you’ll be up and running in no time!