How to Set Financial Goals

You may be hoping to buy a house soon or to retire early, but you're not quite sure how you're going to come up with the extra money to make your dreams happen. Whatever your financial aspirations may be, it is important to set clear and realistic financial goals to make your dreams become a reality.

Instructions

Difficulty: Moderate

1. Evaluate your current financial situation. If your goal is to retire early or to own a house on the beach in ten years for example, but you have a lot of debt to pay off first and you haven't been saving much, you may need to make some life changes to begin working towards your financial goals.
2. Determine and write down your short-term and long-term goals. Be specific and choose goals that excite you so that you're motivated to make changes in your current lifestyle. Short-term goals could include paying off your credit card or taking an exotic summer vacation. Long term goals could include making a down payment on a house or retiring near the beach.
3. Keep track of your expenses for one month so that you see where your money is going.
4. Reduce the amount of money you spend on unnecessary items such as your morning cup of Starbucks or your weekly trip to the mall. As fun and luxurious as those things may be, spending extra money on superfluous items will not help you to reach your financial goals.
5. Contribute a higher percentage of your monthly earnings towards your savings and investments.
6. Write down your specific plan for how you will reach your financial goals. If you're going to stop spending money on clothes and coffee and increase the amount of earnings that you invest by 2 percent each month, for example, write it down. Keep this and your goal sheet visible so that you are motivated each day to make your financial dreams come true.

Tips & Warnings

• Save money each month for emergencies that may arise. If your car needs repairs suddenly, pay for them out of your emergency fund rather than using up your allotted savings and investment money or using high interest credit cards.