Updated on April 28th, 2023
Whether your financial goals include saving for a family vacation or setting aside a down payment for a new home, you'll need to have some idea about how much money you'll need and the right steps to take to help get you there. And depending on your income, obligations, timing, and personal values, exactly how you get there may look different.
To help get you started setting and meeting your short- and long-term financial goals, here are some tips for setting financial goals for all kinds of situations — from that $100 pair of sneakers you want to a $1 million retirement.
What are long-term financial goals?
Definitions vary, but long-term financial goals are those that take years or more to accomplish. Examples include paying for college, buying a home, or saving for retirement. Because these goals may be for things you need in the distant future, they require discipline to start early enough to accomplish. It's tempting to put them off for another month or even a year, but the best time to start saving for these larger, long-term financial goals is today.
What are short-term financial goals?
Short-term financial goals can include anything from saving $50 for next week's dinner to paying for a repair on your home. While it could take up to a year (or more) to set aside enough money, short-term goals are considered to be one-time, smaller items you save for. These smaller goals are good to have because they are often easier to meet and can help you practice for when you have those larger, long-term goals looming on the horizon.
How to set financial goals
Financial goal setting doesn't happen all at once, and it certainly doesn't get accomplished overnight. Improve your chances of realizing your financial goals by doing the following:
1. Set realistic goals for your current lifestyle
Do you want a dream wedding that includes elephants and a designer dress? Depending on your current earnings, this might not be the best goal to set (at least for now). Part of goal setting requires understanding how much saving it will take to get there, and if the numbers never add up, you'll need to scale back your goals a bit.
That doesn't mean the dress is out of reach. In fact, it might make a great goal for you to save for. Just understand that you only have so much time and money, and you'll need to consider the resources you have right now.
2. Prioritize your goals
Very few of us have just one financial goal in mind. Young adults, in particular, are full of big goals, from paying for college to buying a home to getting their first car. While there's nothing wrong with creating a full lineup of things you want to accomplish, it works best to focus on one at a time. Ask yourself, "If I have $1 to put toward anything, which goal would I put it toward?" You can also split up money to achieve multiple goals, but knowing where just $1 would go will help you determine which goal is the most important.
3. Make a plan
Now, you get to be the engineer of your financial life. If you need $300 for a vacation rental, and the vacation is in three months, you know what you have to do. Ideas include:
Spend $100 less each month by pausing your streaming subscriptions, cooking at home, or taking the bus instead of ride-sharing
Earn $100 more each month by selling a few items on Facebook Marketplace, asking for a few hours of overtime, or babysitting your neighbor's kids
Try a combination of both earning more and spending less. With this half-and-half approach, you put less pressure on yourself
One mistake people may make is setting a goal but not having a plan in place for how to pay for it. This will create a frustrating scenario for you, so do your homework and create a plan that is achievable.
4. Save the money somewhere safe
As a kid, you may have had a money jar or piggy bank where you could stash your extra cash. As an adult, you should aim for something that not only keeps your money safe but also works for you while you wait to have enough for your goal.
A high-interest savings account1 combined with a tool like the Netspend All-Access debit card2 gives you the right combination of earning interest while still having access to your cash in case you meet your goal early and want to pay for your item.
5. Revisit your goals
If it's been a few months, consider checking in on that goal and see how you're doing. Are you making the progress you expected? If not, what could you be doing better? If you've done all you can, you may consider adjusting your goal so that you have more time to save. Don't feel bad if you didn't meet your goal, but be realistic about the reasons it didn't happen this time. You can learn from them!
Are you well ahead of schedule? This can happen if you get a raise at work, cancel some services you don't need, or find your goal wasn't as expensive as you originally thought. You can adjust your goal or just meet it early and use the extra money to fund your next goal.
Ready to set some financial goals?
If you've never formally set any financial goals, now's a great time to start. Think about the things you've considered important to save for. Having both short-term and long-term financial goals works for many people. Just follow the steps above, and you'll know exactly where to put that next $1 you save or earn.
1 No minimum balance to open an optional Savings Account. Savings Account funds are withdrawn through your [BRAND SHORT] Account (maximum 6 such transfers per calendar month). The Savings Account linked with your [BRAND SHORT] Account is made available to Accountholders through [BANK NAME], Member FDIC. Funds on deposit are FDIC insured through Pathward, N.A. For purposes of FDIC coverage, all funds held on deposit by you at Pathward, N.A., will be aggregated up to the coverage limit, currently $250,000.00.
2 IMPORTANT INFORMATION FOR OPENING A NEW DEPOSIT ACCOUNT: To help the federal government fight the funding of terrorism and money laundering activities, the USA PATRIOT Act requires us to obtain, verify, and record information that identifies each person who opens an Account. WHAT THIS MEANS FOR YOU: When you open an Account, we will ask for your name, address, date of birth, and your government ID number. We may also ask to see a copy of your driver’s license or other documents at any time. All Accounts are opened subject to our ability to verify your identity by requiring acceptable types of identification. We may validate the information you provide us to ensure we have a reasonable belief of your identity. If we are not able to verify your identity to our satisfaction, we will not open your Account or we may close the Account if it was previously funded. Your Account is subject to fraud prevention restrictions at any time, with or without notice.