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WHY you should be setting financial goals… and HOW to set them

From the day you turn 20 to your last day of being 29, people will tell you how important it is to live this decade with #noregrets, make memories with ya besties see cool places and do fun things… cos YOLO

Which screams that you should live with reckless abandon…and that can be super conflicting when you are also being told at the same time to educate yourself and be responsible with your finances, to not get in any debt and be careful not to ruin your credit score.

It feels like a long old list of should and should not’s that on the surface seem to really contradict each other. Who wants to wake up in the morning every day with the burden of looking for the sweet spot between living your best life and being super responsible? It’s a never-ending battle between the present vs. the future. And unfortunately, this battle does not just disappear with age or when you reach a certain salary.

But I can promise you, there is a way to make it easier!

None of us want to look back at our life and be disappointed with how little fun we had in our 20’s because we were so hung up on creating financial security for the future. But we also don’t want to reach our 40’s and still be paying off bad debt and playing catch up with our finances because of all the money we spent recklessly years ago.

So, what is the special ingredient to the recipe of balance?

People will try to scare you and say you can’t have both… but you absolutely can (within reason…).

Luckily for us all, the answer is straight forward (FINALLY, something easy)…. we need to set financial goals

Usually, when we set New Year’s Resolutions for the year, they are to do with our ‘personal development’ goals like learning how to speak Spanish or how to play an instrument or taking up running. These things are usually free or come with a low-price tag.

But when we think about our futures and we set big goals, we usually think about the ‘WHAT’. We know we want to buy a house, have a family, set up a business, or travel the world – all incredible things to achieve but we need to think about the HOW.

Setting financial goals has SO many benefits and is one of the key elements of working towards financial freedom.

So why should we set financial goals?

Create a real plan of action

We can use our monthly budgets to factor in money to savings or to investments to help reach our financial goals. This level of planning is SO is crucial to achieving what we want in life whether that is a nice holiday to the Bahamas, a massive house with a pool or to be able to retire at 50.

Work out how much money you need for each goal, and what month/year you need it by, break it down by how many months/years you have to achieve this goal and *voila*, you know how much you need to save each month.

Balance and opportunity

Knowing what you need money for and how much you need to put away allows you to find the balance you are looking for.

The ‘responsible’ bit is that by saving in little chunks every month towards your goals, you know that you don’t need to worry about ‘finding that money’ in the future and pulling it out of thin air (aka getting into bad debt for something).

The ‘having fun now’ bit is that you can budget your money to save first and spend what is left over, completely guilt-free and that can buy you experiences and opportunities that enrich your life now,

Stay motivated

If your end goal is at the top of an imaginary staircase, and there are hundreds of steps ahead and the goal seems so far away, we can become demotivated and think “ahh I will never get there, it is too far away”. Instead of looking at the full staircase, you should just take one step up at a time.

When you set goals, you can keep track of any progress you make and no matter how small, it allows you to celebrate the little wins. (but make sure you don’t celebrate saving £100, by spending £100… because then you are back to square one!)

Have focus and accountability

Do I spend £100 on this pair of shoes to add to my ridiculously huge collection, or do I put that £100 in savings to get me £100 closer to achieving my goal?

When you have a clear goal, it makes the answer to questions like the above so much easier and clearer. Goals are purpose to save. You can start to balance out what is ‘worth it’ to you, and helps you put your future self-first.

Manifest and makes your dreams a reality

Success is not based on perfection; it relies on consistency and determination. When you set a financial goal for your dreams, no matter how big or small, it is a huge step in helping you bring those dreams into a reality.

How to set financial goals

It may take 1 year it may take 10 but having clear goals will allow you to work steadily towards whatever you want to achieve. Take control of your future and manifest anything you can dream up!

I like to break my goals down into 4 chunks:

Today’s goals

Timeframe – 0-1 years

Example goal – A holiday or you need new laptop

Short-term goals

Timeframe – 2-5 years

Example goal – Buying a house or going travelling

Medium-term goals

Timeframe – 5-10 years

Example goal – Starting a family or setting up a business

Long-term goals

Timeframe – 10+ years

Example goal – Retirement plan

These are just some examples of goals and they will be completely individual to you and your life.

Remember: There is NO right or wrong. But what IS important is you think about the goals for the immediate as well as the goals for the long-term future.

It can be easy to ignore the medium-term and long-term goals, because it 5+ years’ time seems so far away.

But time passed whether you make goals or not, and that point ‘far in the future’, becomes your Now. Your future is the reality of how you spend your time now so the sooner you start planning, the better!