It’s 2024 and right now, everyone’s focused on making resolutions that will improve their life. Maybe you want to lose weight, eat healthier, or pick up a new skill. Whatever your goals are for 2024, make sure you include some financial goals on the list.
Why Should You Set Financial Goals In 2024?
You can’t just expect your finances to improve without knowing what you are trying to accomplish. Setting financial goals helps you build a roadmap to your desired financial future. Sure, you may want to invest more, but invest for what goal? If the goal is to invest for retirement, IRAs and mutual funds are useful. If you have shorter-term savings goals, you may benefit from a high-yield savings account.
What are your financial goals and what is your time frame for saving? Saving for vacation looks very different than saving for a house – and you need a plan for both. If you want to build your dream life, you have to be specific with your financial goals.
Setting financial goals can also reduce your stress. According to a recent Bankrate survey, financial uncertainty detrimentally affects 45-60% percent of people, worsening depression and anxiety. Setting financial goals can provide some relief and some hope – in addition to setting you up for success.
Setting Your Financial Goals
The first step towards building your financial goals is simple – sit down and think about what you want your future financial life to look like. All of it – retirement, buying a house, and even smaller things like a weekend trip or designer shoes. Then, write everything down. You can include detailed dreams as well as those that are less formed – you can always expand on them later.
Next, approach your goals using the SMART framework – Specific, Measurable, Achievable, Realistic, and Time-Bound. First, get more specific on each goal. For instance, consider where you would stay on your dream vacation, what you would do, and where you would eat. Looking at the menus and lodging costs will tell you how much money you’ll need for that goal, making your goal measurable. Now, pick a realistic timeline. If you make $40,000 a year … buying a Porsche in six months? NOT achievable. But, maybe your dream is a one-week safari in Africa costing $8,000. If you have three years to save $8,000, that’s $222 per month. If you can save $222 a month – either by earning more money or spending less money – that safari could be yours in three years! Achievable, realistic, and time-bound (three years).
Next, sort your goals into short-term financial goals (goals to complete within one year), medium-term financial goals (goals that will take longer than one year, but less than five years), and long-term goals (that will take more than five years). You should have goals in all three categories.
It’s important to note, your goals don’t have to be just saving or eliminating debt. They can include learning more about managing your money, overcoming toxic feelings surrounding money, or raising your children to be financially literate. The key is to be specific about what you want to accomplish and how you’re going to do it.
Short-Term Financial Goals
Short-term financial goals – goals you’ll accomplish within one year – are crucial to winning financially in the long-term. This is because these are often the most urgent goals – eliminating debt or funding your emergency fund, each will put you in a better financial position in your day-to-day living, which will help you achieve your longer-term goals.
Short-term goals also include the fun stuff – vacations, a bigger purchase, or a special date. These goals are important psychologically because they count as wins. When you want a week in Mexico or a big-screen television, and you can save for it in six months, you know that saving-up for a purchase really is effective. And as a result, you’ll be more motivated to save for longer-term goals!
There’s also value in helping high-schoolers or even younger kids set short-term financial goals. Some short-term financial goals for high school students include saving for a car or a video game, getting a job, and learning to budget. Helping your children build good financial habits means they’ll start their adult life ahead of the game.
Medium-Term Financial Goals
Medium-term financial goals are goals that you want to accomplish in the next one to five years. These goals may include paying-off debt, buying a new car, or saving-up the down payment for a house. These goals are a little harder to stay focused on because it can feel like a long time without a payoff. But just remember that each goal is a key part of building your dream life.
Long-Term Financial Goals
Your long-term goals are often the most significant. We’re talking retirement, funding your kids’ college tuition, and building generational wealth to leave a financial legacy. But, just because the goal is far into the future, doesn’t mean that you shouldn’t start saving now. The opposite is actually true. Due to the time value of money, putting money into your retirement fund at 25 years old versus 35 years old can have a huge impact on the future value of your retirement account!
Prioritizing Financial Goals
Now that your goals are sorted, prioritize them. What are your most important goals? What goals are necessary for you to feel safe and happy? (Hint: emergency funds, being debt-free, and having a plan for retirement are probably top-priorities.) But you may also choose to prioritize a trip to Mexico before saving a down payment for a house – and that’s okay. What you want out of life is up to you. What is important is to prioritize your list of financial goals because, as you look at your prioritized list, you may decide that having dinner at that fancy Michelin-star restaurant isn’t worth delaying achieving your next financial goal.
So, sit down and really fine-tune your financial goals so that you can build your dream life. Make sure those goals fit the person you want to be and the values that you hold. Then, make a plan to achieve your goals. If you need help, set up a free consultation for financial coaching – and join my email list to join my 2024 Savings Challenge (I promise that everyone can do the challenge, even if your budget is tight!). Make 2024 the year you set and achieve your financial goals!
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