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Setting Financial Goals

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Setting Financial Goals

Setting financial goals is the foundation of financial planning. Developing a financial plan is designing a roadmap of your financial future. It will outline what you would like to accomplish regarding your financial goals at different stages throughout your life. Taking time to set short, intermediate, and long-term goals along with an action plan to achieve them will help you build a confident and secure financial future. Let’s take a look at the goal-setting process.

Things To Know

  • You have an even better chance to accomplish your goals if they have the characteristics of a SMART goal.

How to set SMART goals

Most goals that have a chance of being accomplished are goals that are put in writing. You have an even better chance to accomplish your goals if they have the characteristics of a SMART goal. Review the chart below to learn what the acronym SMART stands for and how to write an effective SMART goal. Additionally we have provided you with an example of a financial smart goal.

Setting SMART financial goals

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As you can see, there is a clear roadmap established for this goal, and the goal will be met if the action plan is implemented as stated. Let’s take a deeper look into setting smart financial goals for your short, intermediate and long-term needs.

Short, intermediate and long-term goal setting

Most financial planners and advisers recommend breaking your financial goals into short, intermediate and long-term categories. When setting financial goals, it is important to calculate the cost of the goal and create a plan to save for your goal. How much money will you allocate from dollars you already have saved and how much will you save each month in order to reach your goal? Also, be sure to factor in any anticipated interest and growth you expect based on your investment selection.

Let’s explore each of these categories in a little more detail by reviewing the examples below.

Short-term goal

Short-term goals

Interest/growth rates will vary and may be negative. Actual results may differ substantially from that shown. This illustration is hypothetical and is not meant to represent any specific investment or imply any guaranteed rate of return.

Intermediate-term goal

Intermediate-term goals

Interest/growth rates will vary and may be negative. Actual results may differ substantially from that shown. This illustration is hypothetical and is not meant to represent any specific investment or imply any guaranteed rate of return.

Long-term goal

Long-term goals

Interest/growth rates will vary and may be negative. Actual results may differ substantially from that shown. This illustration is hypothetical and is not meant to represent any specific investment or imply any guaranteed rate of return.

Taking this approach will help you paint a picture and outline a plan for achieving the important financial goals you have at various stages over your lifetime. Calculating the amount you need to save is a matter of doing some simple math. The hard part is to have the discipline to put the savings plan into action. If you have an important need or goal you want to save for, be sure you commit to this goal-setting process.