10 Financial Goal Setting Examples [+Mindset and Smart Tips]

You might want to achieve financial independence, or have one million dollars in the bank. 

How do you get there?  How does everybody else achieve those milestones?

Well, it all starts with setting financial goals.  This article will give you the knowledge to help you get started on your path to living the life that you want.    

What is a Financial Goal?

Financial goals are savings, investing, income, spending or debt repayment objectives that you aim to accomplish over a specific amount of time.     

Different people will have different financial goals because, as the saying goes, “Personal Finance is personal.”  If you took a group of half a dozen people, they would all have different incomes, expenses and debt levels.  That is why there is no set of financial goals that will work for the broad population. 

Before Setting Your Financial Goals

Before setting your personal finance goals, there are some valuable exercises you need to go through first. 

1. Calculate Your Net Worth

To calculate your net worth, calculate your assets–items you own that have value like your house, car, savings account balances, investments, etc. 

Then you have to calculate your liabilities- items you own but owe someone for the balance like your mortgage, car loan, student loan, personal loans, etc. 

Your net worth is simply the difference between your assets and liabilities.

Net Worth = Assets – Liabilities

Your net worth is a snapshot of your overall money picture at a particular point in time.  If you have a positive net worth, that means you have more assets than liabilities.  You want your net worth to be a high positive number. 

If you have a negative value for your net worth, then you have more liabilities than assets and that means that you owe more money than you have.  It is not a pleasant situation to be in, but it is not insurmountable if you want to make changes. 

Figuring out your net worth makes you more aware of your financial picture without involving emotions.

2. Figure Out Your Budget

You may cringe when you hear the word “budget” because you think it means depriving or denying yourself of the good life.   

However, a budget gives you the ability to track your financial trend monthly.  You determine how much you earn and spend each month.  Once you have that data, you can make adjustments to improve your financial situation.

  • Is your trend positive? 
  • Are you able to increase your savings, your investment contributions, or meet your financial goals? 
  • Is there a negative trend?
  • Are you constantly overspending and going into debt?

Ideally, you want your income to be much higher than your expenses.  If you are in that position already then you are living within your means. 

Without tracking your income and expenses through a budget, you would have no idea if your money habits have to change or not.

You know what your net worth is and what your budget is at this point.  Your net worth measures all your assets and liabilities over your lifetime.  Your budget looks at your monthly financial position.

Armed with this data, you can now focus on your goals. 

Without this data, you can make some unattainable goals. 

For instance, if you spend $1,000 more than earn per month, setting a short-term goal to accumulate $75,000 for a house down payment in one year would not be an achievable goal. 

And, if you don’t have a budget, you may have thought you were saving money each month. 

Financial Goal Setting: What is Your ‘Why’?

You have to determine what your reasons are for your financial goals.  If you know why you’re doing something, you are more likely to achieve it and you will have a better chance of keeping yourself accountable. 

If you set a goal of saving $5,000 for your dream Caribbean cruise vacation, that is fantastic. 

But what happens if you also love shopping?

However, if you have always loved the Caribbean culture and you want to experience the vibes at each port city in one trip then you will have a great deal of motivation to save $5,000 even if it means no more shopping sprees for the next two years. 

If your reason for saving for the same cruise is that all your other friends want to go as a “Graduation Celebration” and you don’t like water-based events, then you have less motivation to meet your goal and you may still go on your shopping sprees. 

Think about what you want out of life and what you want to do.  After all, it is your life. 

Maybe you need to tell your friends you can’t go on the “Graduation Cruise” and think of another goal, like putting $5,000 towards a condo down payment. 

Make a list of some financial goals you would like to achieve; there will be several examples further down in the article. 

Financial Goals and Setting Time Categories

You can break your goals into timeframes so you can plan your money moves in advance.  There are three financial goal periods.

  1. Short-Term Financial Goals (Up to 12 months).  Some examples might be paying off your credit card debt and building an emergency fund.
  2. Medium-Term Financial Goals (1-5 years).  A couple of examples would be paying off a car loan or getting a raise of $5,000 at work. 
  3. Long-term goals (Anything over 5 years).  A long-term goal may be to start a business or save for retirement. 
Types of Financial Goals

You can also break your goals out into categories like:

  • Income
  • Savings
  • Spending
  • Debt repayment
  • Investing

Being organized is another key to reaching your goals.  If you have four goals and all of them are long-term goals, you will need to add in some short-term goals that can help focus you on your path towards the long-term goals. 

Setting SMART Goals

SMART goals are objectives that are specific, measurable, achievable, realistic, and time-bound.  Here is a closer look at each component of a SMART goal. 

Specific

Your goal needs to be clear, concise and steer clear of any generalities.  Setting a goal to “make more money than last year.” is nowhere near as good as “I want to earn $6,000 more this year than last year.”

Measurable

You need to track your progress along the way to reach your goal.  This way you can figure out well before the deadline whether you are going to achieve your goal. 

For instance, if you want to earn $6,000 more this year (an average of $500 per month) than last year, you could compare your income totals for both years at monthly intervals. 

If you find that in each month between January and March you earned only $100 more than the previous year, you have to either re-evaluate how realistic your goal is or change your behaviour.  If it’s the latter, you can get a part-time job, work more overtime at your regular job or start a side hustle to can make up the difference.

Achievable

There is no point in tracking something you don’t have any hope of attaining.   If you decide to go back to school for a year and you take a leave of absence from work, then you won’t have any chance to earn $6,000 more than you did the previous year.

Realistic

This will help you keep motivated.  Set a realistic goal.  If you want to save $2,500 per year for your child’s education but your spouse just lost his or her job, then you will probably fall short of your goal for the year. 

Rather than feel frustrated about it and give up, could you adjust the dollar value downwards to $1,500 so that you still have a goal to stretch for? 

Time-Based

Placing a time component on your goal helps kick you into gear.  A deadline helps keep you accountable and ensures you take the steps to fulfill your goal.  Imagine your goal was to save $10,000.  Is this a one-year, five-year or ten-year goal?  The timeframe certainly changes the difficulty of the goal.  

SMART Financial Goals

Source of Funds for Financial Goals

Your savings accounts, Guaranteed Investment Certificates (GICs), bonuses, tax refunds and selling your old items are all good sources of funds for achieving your financial goals.

You should not invest money when you need it for short or medium term goals.  Both the real estate and stock markets could face multi-year crashes or corrections and leave you over 20% down on your investments. 

If you are trying to save $20,000 for a wedding next year, you would be thrilled if the stock market gained 25% and you had $25,000 in your account.  If the market crashed, though, you could end up losing far more money than you could afford. 

Suppose the stock market crashed by 25% two months before you needed to pay all your vendors and the banquet hall and you only had $15,000 instead of $20,000?  You would have to cut back on some of the services you wanted.  Pretty stressful, right?

That is why you keep short and medium term goal money in high-interest savings accounts or GICs.

For long-term goals, you can invest some of the money in the stock market understanding that you may lose it, but historically, over longer periods, the markets have produced positive returns. 

10 Popular Financial Goal Setting Examples

You might need a list of financial goals to start with before you think of your own. The amount of money needed may push a goal that you would think is short-term into the long-term category.  None of the timeframes you choose are set in stone. 

If you want to donate $150 every year to your favourite local charity, then it would likely be a short-term goal.  However, if you wanted to donate $10,000 to your favourite charity then it could qualify as a long-term financial goal. 

For a couple earning $300,000 per year combined, a home renovation could qualify as a short-term goal as they could expect to save $50,000 to remodel their kitchen in several months  For a single person earning $60,000 per year, that would be a medium to a long-term goal.

Your goals depend on your unique financial situation.      

Here are some of the more popular financial goal-setting examples.

Financial Goals

1. Build an Emergency Fund

It is very important to set yourself up with an emergency fund to deal with expensive out-of-the-blue repairs or the sudden loss of a job. Having an emergency fund helps you avoid taking on debt to fund large and out-of-the-ordinary costs.

Depending on how much you save monthly, building an emergency fund of up to three or six months’ worth of expenses could be a goal you reach within a year.  Or it could take a few years. You shouldn’t invest large amounts until you have a smaller emergency fund built up. 

2. Reducing Expenses by X%

You need to know your income and track your expenses, which is why creating a budget is so crucial to see how you are doing financially each month.  The creation of a budget itself could be a goal, but let’s take it a step further and imagine you have already accomplished that. 

Now you need to track your expenses either by downloading your credit card purchases, using paper and pencil or using an app like Mint.  Once you have a baseline of costs by budget category, set a goal to reduce it by 5 or 10% in a couple of months.  Use that extra freed-up savings amount to fund other financial goals you have set for yourself. 

3. Purchase a Big-Ticket Item

You can have spending goals as well, which are usually short-term in nature.  If you want to save up for a MacBook Pro because you will use it for graphical design tasks, then you may have to save $1,500 with the ultimate goal of spending it to purchase the laptop. 

 This is an example of spending wisely because you are going to use your purchase to help earn future income. 

You can purchase fun items too like televisions, or functional items like fridges and ovens.  Just be sure to shop around for deals and ignore new features that do not even add any value. 

4. Saving for a Wedding

I have been a part of weddings that cost anywhere from $5,000 to $40,000.  The cost alone makes saving for a wedding a medium-term goal.

Not only are the costs rather large, but so is the time required for a big wedding.  I know couples that dedicated almost every weekend in the year leading up to their wedding day working with vendors, deejays and planning engagement and bachelor/bachelorette parties. 

5. Paying off Your Car Loan

Your car loan can easily be $20,000 or more, for seven or eight years.  In this case, your spending goal has been made for you.  You need to pay off your car loan of $20,000 in 7 or 8 years.  Before interest, that works out to around $2,850 per year, so you know you’ll need a lot of extra dollars. 

6. Get a Raise at Work

When you get your first job, you’re just happy to join the workforce.  You may make a move up from entry-level and get a small pay increase. 

After that, you may have to consider moving to another employer to get a substantial pay raise and you should not be afraid to do it.  If you have a goal of earning $10,000 more than you currently are, in five years, then take the steps to make it happen.

It may take a few years to get another designation or qualify for a professional certification but once you get it, approach your current employer and make your case. 

7. Save for Retirement

If you want to say goodbye to your regular 9-to-5 job and retire then this is how to do it.  You achieve financial independence by saving and investing and then living off the gains and dividends that your investments provide. 

Your government pensions or social security in North America is designed to cover your basic needs. But odds are you are accustomed to a quality of life higher than that.

This means that you should save and invest specifically for retirement so that you can continue to enjoy the same standard of living as when you were working.  It comes as a tradeoff between having fun now and securing a future later.

An example could be “I want to save $1,000,000 by the age of fifty-five and retire.”

8. Start a Side Hustle

The internet and technology have made starting your business more cost-efficient.  But you don’t even need to start a business, per se.

You can:

  • Drive for Lyft or Uber 
  • Write an e-book 
  • Start a blog 
  • Become a Virtual Assistant 
  • Start a YouTube channel
  • Be an affiliate marketer 

The list is long.

An example of a side hustle goal may be to “have a successful YouTube channel that generates $10,000 of income per year within the next three years.”

9. Save for Your Child’s College Education

The price of tuition has increased faster than most things in the modern world.  In Canada, you can start saving for your child’s college education through an investment account called the Registered Education Savings Plan (RESP) in Canada or a 529 College Saving Plan in the United States. 

Even investing $25 per month can grow to $9,757 after 18 years with a 6% return.  Investing $100 per month with the same 6% return over 18 years would leave you with $38,808.

What if you were to invest $300 per month under those same conditions?  It would turn into $116,279.  So a simple goal could be to save “$x amount of dollars each year for my child’s post-secondary education.”

10. Save for a House Down Payment

If you want to own real estate and you don’t have wealthy parents, then you need to save money to put a down payment on a condo or a house.  To avoid extra housing insurance, you need to come up with 20% of the home’s value as a downpayment which is quite the feat in today’s Canadian housing market.  

The good news is that if you can get into the real estate market, you may be able to benefit from your home appreciating in price. 

A simple “I will save $50,000 after five years to use a down payment for a home” is a good example.

Goal Setting Needs to Be Monitored

Calculate how much you need to save, earn or invest to reach your goals ahead of time and keep updating if it’s a long-term goal.  Let’s say you want to save up to buy a $20,000 car in 5 years. Figure out whether you still want that exact model of the car closer to the time or if it is still being offered.  Perhaps the price could have increased by the time four years are done and now you need to save $23,000 to buy it. 

While progressing towards your financial goals, your situation may change.  You may move in with someone, get married, have a baby, earn a promotion, or move to a new province or state. All these events will change the amount of income and expenses you would have. 

That means you will have to rework your goals based on your new situation. When it comes to plans, always expect them to change because the world is ever-changing and so is your life.

5 Tips for Setting Financial Goals

Hold up, before you go here are some handy tidbits and tips for helping you set your financial goals.

1.Break Big Goals into Smaller Goals

Setting a goal to save $500,000 when you are starting at $0 makes it harder to motivate yourself because the goal seems more like a dream than something that is achievable.

Therefore it is better to set smaller goals with shorter time frames that generate excitement.  

So you could set a goal to save $10,000 in the first year on your way to saving $500,000 overall.  

That feels like a target you could reach, right?  

Then the next step could be to save $50,000 in three years.  

2.  Build Support and Accountability Teams 

Let your friends and family know that you have certain financial goals, like saving for a down payment on a house so that they can support you.  Once you tell your friends they won’t pressure you as much to go on an out-of-town vacation or buy rounds at the bar for everyone.  If they have a problem with you reigning in your spending, maybe they aren’t good friends after all. 

You can also discuss having a no birthday gift rule with your family, so no one is offended if they don’t receive a gift card from you to their favourite store. 

If you’re lucky, a family member or a friend will join you on your path to achieving your goal, giving you an instant accountability partner who can help bring you back in step if you get sidetracked.  You can share how you’re feeling and give/receive encouragement whenever it’s needed.

3. Automate whatever you can

If you are saving to re-do your bathrooms, then you can set up automatic transfers from your chequing account to a savings account dedicated to renovations.  Once you get your direct deposit, the money leaves your chequing account and you don’t see it at all.  So you will not be tempted to spend it. 

If your goal is to eliminate your interest charges because of late payment incidents with your utility and telephone providers, then you can set up pre-authorized payments.  You can still look your bills over after the fact in case there are errors. However, you won’t forget to pay your bills by the due date because you’ve already set everything up to be on autopilot.

4. Write your goals down

This is a very important tip. 

Writing your goals down helps you focus on your goal.  Write your goals down on a huge piece of Bristol board and put it in a place where you can see them every day.  If you are saving to buy a car and you have your board by your closet door where you get keys before you head out, you’ll see it all the time and remember what you’re trying to accomplish. 

When you’re out and you get hungry, you are more likely to remember your goal board and avoid the mall cafeteria and come home and eat something you prepared. 

5. Celebrate like you’ve won the championship

When you set a medium or long-term goal, it could easily be 3+ years away from now.   Imagine waiting all that time without acknowledging that you’re on track to meet or surpass your goal?  That would not be too much fun.

You deserve recognition, so don’t forget to treat yourself to a night out. Have your favourite restaurant meal, a night at the movies, or do whatever it is you want to do to celebrate your progress for reaching a big financial goal. 

Conclusion

It may seem quite daunting at first to wrap your head around all the planning that has to go into creating financial goals for yourself.  However, all the hard work is worth it in the end. 

If you want to create a life where you can save for expensive “once-in-a-lifetime” vacations every few years, or you want to achieve financial independence you have to take steps and live life differently than most of your friends and family members. 

Most people do not want to put in the work, or they are too overwhelmed to start planning.  If you want to live your best life, it is up to you to change the way you live. The changes may be dramatic but it becomes easier once you gain momentum.

Momentum works like this.  You set one fairly attainable goal, like automating your direct deposit.  Then you set another goal to reduce your expenses by 5% in two months. 

You can do those both quickly.  You feel better about yourself and you begin to believe that you can knock off more financial goals that are medium to longer term.  It can get addicting, the saving of money to meet your varying financial goals.  You can even see yourself turning it into a game, where you hit the easier goals and level up to the next set of goals. 

After reducing your expenses, begin to contribute $100 per month to your retirement account.  Then you start saving $25 per month for your child’s college fund.  You save for and buy a big-screen television.  Whatever it is, you focus and achieve.  That’s how you make your way from humble beginnings to retiring early when you’re 45 years old. 

You got this!!

Financial Goals Conclusion

Financial goal setting is a sure fire way to keep you on track to hit your targets.  You may not ultimately reach your goal in the timeframe you gave yourself, but without a goal you would be sunk before you even started.

Our lives are filled with a lot of noise and distractions that can veer us off the path towards our financial goals.  By setting SMART financial goals and choosing the correct categories to focus on like income, savings, spending, debt repayment and investing you give yourself a great chance to achieve your financial dreams.

Which financial goals are you currently working on?  Share them in the comment section below.

Financial Goals FAQs

What is a SMART financial goal?

A smart financial goal is an acronym for a goal that is specific, measurable, achievable, realistic, and time-based.  Your financial goals need to be focused and have time deadlines associated with them.

Why are financial goals important?

Financial goals are important to set because they clearly articulate what you want to achieve and gives you a clear target to reach.  Financial goals also let you track your progress which helps you stick to your goal-oriented mindset.

What are three types of financial goals?

There are three types of financial goals based on time.  There are short-term (up to 12 months) , medium-term (1-5 years)  and long-term goals (5 years). 

A short-term goal would be to save $500 per month.  A medium term goal would be to raise your income by $3,000.  A long term financial goal example might be to achieve financial independence.

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