Setting financial goals can be really exciting. It’s a chance to dream about the kind of life you want to live and the things you want to do. Maybe you have a goal to buy a house or build financial security rather than living month to month. Perhaps you dream about increasing your generosity or planning for a comfortable retirement.
Or maybe you have some shorter-term financial goals like starting an emergency fund, saving for a wedding, completing a home improvement project, purchasing a vehicle, or going on a vacation.
Whatever your goal is, odds are it will take some work to get there. It is not enough to simply identify a financial goal. If you want to reach it, you need to create a plan. Here is how to get started.
Establish your timeline and your budget.
You can’t predict what will happen every step of the way on your financial journey. But without setting a budget, you’ll be floating aimlessly rather than sailing straight toward your objective. Depending on how big your goal is, how soon would you like to accomplish it? Is this a goal that will take months, years, or decades?
This does not have to be a rigid timeline, and it is OK for it to be aspirational, but try to be realistic too. If your timeline is unrealistic, you will need to either adjust your timeline, increase your income, or decrease your expenses.
As you decide on a timeframe for your goal, consider what you would have to set aside each month to get there. If your goal is to put 10 percent down on a house that costs $300,000, and you want to do that in the next two to three years, how much would you have to set aside each month to save $30,000 in that timeframe?
Thinking through this process will help you see what it will take to accomplish your goal. After your regular monthly expenses, how much is left to apply toward your goal? How does that measure against your timeline for your goal? If you apply the amount you want toward your goal each month, what expenses can you reduce to make up for it? This step will help you decide if you need to either change your goal or make some other changes to your life first (like creating additional revenue streams or finding ways to save money).
Explore your opportunities.
Take inventory of your opportunities to earn money between now and when you would like to reach your goal. Could you pick up a part-time job? Rent out a room in your house? Monetize a hobby? Pursue a path toward getting a raise at your job? Choosing to make some extra cash via an additional opportunity doesn’t have to be a lifetime commitment. What time frame would you be willing to commit to?
Break your goal into specific objectives and create a to-do list.
If you’re working toward a short-term goal, you may choose to skip this step, but it is critical for long-term goals. Creating smaller goals gives you a roadmap to follow rather than leaving you feeling overwhelmed or unsure where to start.
For example, if your goal is to increase your income, you might divide that into smaller tasks such as scheduling a meeting with your manager to discuss what steps you can take toward career advancement, updating your resume, or maintaining a log of examples of your excellent work and positive feedback you’ve received that you can use in a negotiation for a raise or in an interview process.
Or, if your goal is to get out of debt, you might consider each of your debts as smaller goals and prioritize which ones you’ll pay off first. Many experts suggest prioritizing the debts with the highest interest rates and the highest principles while making minimum payments on the others. Others advocate for focusing on the smallest debts first to get them out of the way and build momentum. In either case, you can treat paying off each debt as a step toward your larger goal of becoming debt free.
However you approach it, writing down a to-do list of actionable steps and deadlines will help keep you on track.
We’d love to celebrate with you!
You won’t stumble into achieving your financial goals, but as you practice setting and achieving them, you’ll strengthen those muscles and grow more comfortable with creating action steps to accomplish your dreams. Some goals may be easy, but in other cases you may need to make bigger life changes. If you’d like some encouragement along the way, email us at contactcenter@cdfcapital.org or call us at 888-540-7112. We love to see Christians achieving their financial goals, and we cannot wait to celebrate your success.