It takes a lot of effort for a football team to look effortless on game day. Teams pull it off only after developing stacks of detailed plays and practicing them to perfection.
The same holds true when it comes to reaching your financial goals. Hoping for the best does not count as a real plan. So when you’re looking at your long-term financial future, investing a little time in goal setting now will inevitably pay off – often in surprisingly big ways – years down the road.
Plus, creating and following a personal monetary game plan helps reduce stress because you’ll know exactly where you’re headed and how you’ll get there.
Get smart with your goals
When planning how to handle your money, take a page from performance gurus in a wide variety of fields by setting what’s known as SMART goals. The acronym reminds us that effective goals are:
Here’s how to follow this smart advice when setting financial goals:
1. Use specific, realistic, attainable dollar amounts.
We’re lumping three of the letters in that handy acronym together here, and that’s because they all work in tandem when it comes to financial goals. Do a little research and determine just how much you really need to buy that new car or pay for four years of college.
From retirement to becoming debt-free, those longer-term goals can be intimidating. Writing them all down and then tackling them methodically one-by-one will make it less daunting. Cobalt CU’s savings calculators are a good place to start for help setting realistic goals.
One note about attainability: those big numbers can seem out of reach, especially when looking at goals that are farther off. The key here is to break them down into smaller goals. Once you know how much you need in the end, identify how much to set aside each pay period, month, etc. to get there.
You’ll also want to establish the appropriate vehicle for your savings. Do you want to set money aside in a separate checking account? Is an IRA or 401(k) right for your retirement plans? Exploring your options will help you effectively work toward your goals.
Tip: Use automatic payroll deductions to ensure you actually make the contributions you’ve decided on.
2. Measure your progress.
One good thing about monetary goals is that they’re easy to track. Establish checkpoints to help confirm you’re making progress, even if the finish line is decades away. Whether a goal’s completion date is coming up in one year or 30, getting there is still a matter of setting and reaching measurable milestones along the way.
Tip: Set a recurring reminder in the calendar on your phone or desktop to take stock of how things are going every month, three months, or six months as appropriate. You could also make a habit of checking in at the first of the year, on your birthday, or some other memorable date.
3. Some good news about time.
As you start listing your goals, remember that time is your biggest ally when it comes to the financial future. If you start early enough, regularly investing small amounts can add up to a serious nest egg by the time the kids head to college or you approach retirement, thanks to the power of compounding interest.
The key here is to get started on your goals. While some of them might seem far off, beginning the process now will pay off in the end.
Tip: Looking for some help planning for retirement? See our blog, “Time is on your side: Build retirement savings, no matter your age.”
So wherever you stand financially, start naming your financial goals. This is a game that rewards those with a plan!
Use our Financial Goals Worksheet as a starting point. Download your free copy today!