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6 Steps to Setting Achievable Financial Goals


Achieving your financial goals isn't always easy. But if you don't create a plan based on your goals, you're only making it harder on yourself. Individuals with a plan in place are more likely to make positive progress toward achieving their financial goals. In a recent survey, 56 percent of people with a plan in place reported making good or excellent progress toward their savings needs, compared with only 24 percent of those who didn't.[1] As you look to find financial well-being, let's examine six steps you can follow to create achievable financial goals.

Step 1: Give Your Goals a "Why"
When it comes to numbers, it can be hard to evoke an emotional response. That's why it's important to give your goals a "why" when you can. Placing a reason behind the numbers can be a big motivator in achieving your financial goals. Think about the difference between "I want to pay off my mortgage faster" and "I want to pay off my mortgage faster so that my wife and I can buy a retirement property in the Colorado mountains that our entire family can enjoy." Remembering why you're passing up on that new car or expensive vacation can make your sacrifices a little easier to stomach.

Step 2: Make Your Goals Measurable
Ambiguity won't be your friend as you work to set financial goals. Focus on being as specific as possible instead. Your goals should have a measurable and definitive finish line. This will help you track your progress and allow you to feel a sense of accomplishment once you hit your milestones, both big and small. For example, if you have a goal to save money for a down payment on a new property, choose a firm target number. While you may not know the exact house that you want or how much it'll cost yet, put an estimate to your goal. Instead of saying "I want to save some money and buy a ski house in the next decade," try "I will put at least $1,000 a month in a separate investment account for the next 10 years that will be used as a down payment for our mountain house." This provides a clear, definitive goal that you can track month after month and year after year.

Step 3: Be Realistic
You can follow every step in this guide, but if your goal isn't reasonable you likely won't attain it. As you define a goal, compare your current financial standings with your desired financial picture. If you'd like to accumulate a certain amount of wealth by the end of your 40s or 50s, you need to figure out how to do it. If your current saving and spending habits support this goal, then you're likely on the right track. But if you often spend more than you save, you may need to either adjust your goal or adjust your spending habits. Using a financial advisor can be extremely helpful when setting educational, lifestyle, retirement-planning, and other long-term financial goals.

Step 4: Balance Short-Term Needs and Long-Term Goals
Money is nothing more than a tool. The reason you set financial goals in the first place isn't to simply accumulate more money; it's to accomplish something you have defined as being pertinent to you and your happiness. And while your future happiness is important, it's crucial to strike a balance between your long-term goals and your needs or wants for today. You shouldn't be passing on all trips, vacations, home renovations, car buys, or celebrations now because you're saving for retirement years down the line. Yes, your retirement savings are important. But you need to remember to enjoy what you have today as well. And, of course, the same goes for the other way around. Spending all your wealth today could leave you in a tough spot later down the line.

Step 5: Higher Income Doesn't Equal Success
Are you ever surprised when you hear of celebrities declaring bankruptcy or pro athletes having to sell their assets to pay debts? It makes sense to think that a higher income level means more wealth and financial success. But whether you make $40,000 or $400,000 a year, your wealth and the success of your financial goals depends on what you do with it. If you make $400,000 a year but spend $500,000 on expenses (either frivolous or necessary), you're not building wealth. As you look to set financial goals, remember that it's not always about how much you have, it's about what you do it with it that determines your success. 

Step 6: Meet With An Advisor Who Puts Your Interests Ahead Of Their Own
As you accumulate wealth, managing your spending, saving, and investments can become increasingly complex. Luckily, we are a team of experienced financial advisors who can help you plan for that Rocky Mountain retirement house or looming college tuition. At Obermeyer Wood, we use powerful financial planning tools in addition to our decades of industry experience to help our clients better understand the bigger picture and what adjustments they need to make to hit their goals. If you have a financial milestone you'd like to start preparing for, you must begin with a plan. Reach out to our team to talk more in-depth about planning, goal-setting, and overall strategy. We are here to help.

[1] https://americasavesweek.org/wp-content/uploads/2017/02/America-Saves-Week-2017-Infographic.pdf