How To Set Financial Goals: How To Choose, Prioritize and Track Your Goals

Fnancial Budget GoalsAllen Wohlwend, a CPA and certified financial planner in St. Petersburg, Fla., offers a variety of services to his clients. Some need help with their taxes, others want assistance with retirement funds and many need to sort out their overall financial picture.

There’s a common thread – what is your financial goal?

“For anybody who walks through the door, if they don’t have some financial goals, if they have failed to plan, it’s like the saying goes, they are probably planning to fail,’’ Wohlwend said. “The ones who look ahead and have some concept about what they’re looking to do with their money, the ones who put a plan into motion and establish some good habits, those people are golden.’’

Accordingly, there are golden rules.

The rules aren’t iron-clad, though. Carl Richards, a certified financial planner in Park City, Utah, calls them “guesses.’’ Who knows what’s ahead in 30 years? For that matter, who knows what’s ahead next week? So the smartest, best-prepared people make the best guesses possible.

“When I was studying to become a certified financial planner, the so-called (money) ‘number’ was very important,’’ Wohlwend said. “That was the number we’ve got to get to when we’re 65 to provide us with the lifestyle we want for the rest of our lives. That was a long time ago.

“But what if there’s an economic downturn? What if circumstances change? It’s not just the number that matters in setting your financial goals. It’s the process itself. It’s establishing good habits. If you adhere to consistent saving patterns, you’ve set yourself up for success.’’

According to the 2016 National Financial Capability Study released by the FINRA Education Foundation, there are mixed results among American consumers. The poll of more than 27,000 adults revealed an increasing number of consumers have set aside money for a three-month emergency fund (46% compared to 40% in 2012). But only 39% have tried to figure out how much they must save for retirement, while 56% worry about running out of money in retirement.

Meanwhile, 40% say they spend less than their income, 38% spend about equal to their income and 18% spend more than their income — figures that have remained flat since FINRA released its initial study in 2009.

How To Set Financial Goals

“The bottom line is everyone can do more — and everyone should do more — to plan for their financial future,’’ said Annamaria Lusardi, a George Washington University professor who is one of the world’s foremost experts on debt management. “Make a plan, then follow that plan.’’

An outline for anyone’s fundamental plan should include:

  • Making a budget and living by it. Some are skeptical of the budgeting process. “Budgets are focused on debts and expenses and nobody got rich by focusing on their debts,’’ said Ric Edelman, a certified financial planner who is the author of eight books. “You get wealthy by focusing on your assets and your income.’’ But most experts agree that budgets are useful, if only to clearly define the amount of income and fixed expenses in someone’s household.
  • Paying off credit card debt. Wohlwend said this quality should head the list for anyone serious about establishing financial standards. “The interest charges (on credit card accounts) eat up so much of the cash flow that could be used for other objectives,’’ Wohlwend said. “Once you pay them off, you should be conscious about not using the credit card as much. The whole system enables people to make poor decisions. Once you get caught up in that culture, you don’t even know what’s happening until you add it all up. It’s like, ‘My gosh, I’m $150,000 in debt!’ If you have trouble doing it yourself, try credit consolidation with a reputable company.
  • Saving an emergency fund. Three months of liquidity is a minimum standard. Six months (or more) is better. In a fragile job market, emergency funds are essential.
  • Saving for retirement. Delayed gratification remains an elusive concept for some Americans. “Everything around us is a push to buy, a push to consume,’’ Lusardi said. “We need to making saving — particularly retirement saving — as exciting as consumption. And it is exciting when you consider it gives us the capacity to reach our long-term dreams. People just need to see it that way.’’
  • Living below your means. It’s a simple math equation. If you spend more than your income, there’s debt. If you spend less than your income, there are savings.
  • Developing skills to improve your income. It doesn’t necessarily mean a return to college for an additional degree. It might mean taking on additional training or responsibility at your current job. It might mean finding a mentor, who can provide tips and feedback, or working a part-time job. It could also mean attending conferences and workshops, networking in your profession, taking a class at the public library, anything to acquire more contacts and knowledge.
  • Saving for your children’s education. It’s not getting any easier. From 1980-2014, the average annual increase in college tuition grew by nearly 260% compared to the nearly 120% increase in all consumer items. Why is it important? According to the U.S. Department of Education, college graduates with a bachelor’s degree typically earn 66 percent more than those with only a high-school diploma. Over the course of a lifetime, the earnings are $1 million or more. By 2020, an estimated two-thirds of all job openings will require post-secondary education or training.
  • Saving a down payment for a home. For most people, it’s the most significant purchase and investment. The greater the down payment, the more freedom and flexibility that’s provided for the life of the loan.
  • Improving your credit score. In order to get that home — or any other transaction that requires a loan — it’s always helpful to qualify for a lower interest rate. In simple terms, an improved credit score saves you money by qualifying you for lower interest rates.

How to Achieve Your Financial Goals

The best way to reach your financial goals is by making a plan that prioritizes your goals.

When you examine your own goals, you’ll discover that some are broad and far-reaching, while others are narrow in scope. Your goals can be separated into three categories of time:

  1. Short-term financial goals take under one year to achieve. Examples may include taking a vacation, buying a new refrigerator or paying off a specific debt.
  2. Mid-term financial goals can’t be achieved right away but shouldn’t take too many years to accomplish. Examples may include purchasing a car, finishing a degree or certification, or paying off your debts.
  3. Long-term financial goals (over five years) may take several years to accomplish and, as a result, require longer commitments and often more money. Examples might include buying a home, saving for a child’s college education, or a comfortable retirement.

The goal-setting process involves deciding what goals you intend to reach; estimating the amount of money needed and other resources required; and planning how long you expect to take to reach each of your goals.

Develop A Goal Chart

Developing a financial goals chart is a good way to begin this process. Here are the five steps you should follow in order to set up your goal chart:

  1. Write down one personal financial goal. It should be specific, measurable, action-oriented, realistic and it should have a timeline.
  2. Decide if your goal is short-term, mid-term, or long-term, and create a timeline for that goal. This may change at any time based on your situation.
  3. Determine how much money you need to save to reach your goal and separate that amount by the month and/or year.
  4. Think of all ways you can reach that goal. Include saving, cutting expenses, earning extra money, or finding additional resources.
  5. Decide which is the best combination of ways to reach your goal and write them down.

All of that might sound daunting, but it’s best to set incremental goals. Prioritize, then achieve. After accomplishing some of the easier goals, you gain confidence in your decision making That provides motivation to achieve the more difficult targets that require more time and discipline.

Goal Setting Tips and Resources

There are resources to help everyone stay on course. Financial apps for goal tracking can be helpful. Technology offers a number of goal ticklers, alerts and prompts that can provide a nice road map.

There are also old-fashioned methods. A picture of yourself affixed to the refrigerator door, perhaps simulating that enjoyment of retirement on a secluded beach, might make for a nice visual stimulus.

“If you see it, you believe it,’’ Wohlwend said. “It’s like getting out that old picture of yourself from college, showing what you used to look like. That can help you get motivated to lose those 30 pounds. Whatever the method, if it puts you on the right track, it’s worth it.’’

When the scale finally tips in your favor, it’s only human to seek a reward, such as some chocolate cake. That’s true in the world of finance, too. When you achieve your money goals — either through incremental progress or the retirement finish line — there’s nothing wrong with celebrating a job well done.


Kieffer, C., Lusardi, A., Mottola, G., Walsh, G., (2016), National Financial Capability Study, FINRA Education Foundation. Retrieved from

Hayes, A., (4 September, 2015), Eight Ways to Increase Your Income Without Going Back to School. Retrieved from

Richards, C., (29 October, 2012), Six Tips for Setting Your Financial Goals, The New York Times. Retrieved from