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How to Set Financial Goals and Achieve Them

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It’s good to have goals in life. That’s especially true in your financial life. Setting financial goals can give you a sense of direction and help you build wealth. A goal can help guide your everyday financial decisions.

What are financial goals? They’re big-picture targets that set you up for future financial success. Your financial goal might be to pay off your student debt. Or maybe you’d like to become a homeowner. Working towards these financial goals can improve your lifestyle by reducing stress. When you have a goal roadmap set, you’ll know the next steps you need to take.


Assessing Your Current Financial Situation

Before you set a goal, look at your life and decide where your priorities should be. Do a thorough inventory of your finances. What is your current income? Your tax situation? What’s your budget and your net worth?

Understanding all four of these factors will help you set a realistic goal for yourself. It can be scary to take a good hard look at your debt, income and expenses, but this first step can set you up to achieve what could be your very first financial goal: creating a budget.

Once you have a budget, you’ll know how much money you can set aside for each month. It doesn’t have to be much. DCU savings accounts can be started with 5 dollars or less. Evaluating your financial situation can open your eyes to your financial strengths and weaknesses. Maybe you haven’t been tracking your money. Maybe you’ve been living beyond your means. As intimidating as financial weaknesses might be, it’s empowering to face them. Starting a trackable high-yield savings account with DCU is a great way to start taking control.

Identifying Your Financial Priorities

Now that you’ve taken a good, hard look at your accounts and expenses, you can start deciding on your financial priorities. There are three types of financial goals with different time spans. A short-term goal can be accomplished within a year. A mid-term goal might take one to five years to achieve. And finally, a long-term goal will take anywhere from 5 years to a few decades to complete.

Setting a budget is a good example of a short-term goal that will help you move on to the next financial step. Another popular short-term goal? Create an emergency fund. Covering three to six months of expenses, these accounts are typically set up in a high-yield savings account. The funds accrue interest as you add to them. This way, the next time there’s trouble on the horizon, you’ll be able to avoid debt while hardly feeling the financial bump in the road.

Long-term goals like paying off debt, saving for a house, or saving for retirement might call for a financial plan including popular investment strategies such as a 401K or CDs.

How to Set Financial Goals

When it comes to goal setting, financial or otherwise, the concepts are the same across the board. The SMART goal acronym applies every time! Goals need to be:

  • Specific: a specific goal answers a question such as “What are you saving for?” or “When do you want to be debt free?”
  • Measurable: Measuring finances is pretty simple. How much money are you going to put toward your goal?
  • Attainable: Make sure you can achieve your goal or there’s no point in setting it.
  • Relevant: Save for something you care about. Relevancy will motivate you to stay on track.
  • Timebound: Set a date to achieve your goal. This will help you track your efforts and hold yourself accountable.


Breaking Down Goals Into Actionable Steps

A long-term goal like saving for retirement or paying down your school debt might seem like an impossible task, but by setting mini-goals and recognizing milestones, that whale gets smaller every month.

Setting a timeline for something like saving for a house can make it seem less intimidating. For instance, maybe you create your budget in the next two weeks. Next, reward yourself for following it by setting up a savings account. If you want more help deciding on your next steps and timeline, check out our Balance Program. Providing financial wellness education, it has the resources to help you confidently plan.


Common First Steps to Take to Achieve Financial Goals

  • Create a budget – Using your goals and expenses as a guideline, set a budget to help figure out how much money you can set aside each month.
  • Track your income – After setting a budget, stick to it by tracking your spending. This will help you notice when you’re getting off track and get right back on course to achieving your financial goals. Tracking is easier than ever with DCU’s eStatements. Available on the DCU app or via email, eStatements contain pie charts that show where your funds are going.
  • Put some money to work – Once you’ve budgeted and tracked your income, you’ll know how much money you can save or invest. You may choose to invest your money, which is a great option for long term goals such as retirement. Or you may choose to put your money in a high-yield savings account, a great way to keep your money accessible and an option you’ll prefer when saving for an emergency fund or a down payment on a house.

Paying Off Debt and Managing Credit

  • Know what you owe – Before you can set a goal to pay off your debt, you need to figure out how much you owe. Look at the big picture rather than addressing payments as they arise.
  • Prioritize debt repayment strategies – Pay off the debt with the highest interest rates first. Those are the debts that will cost you the most money the longer you wait to pay them. It’s a great idea to ask for help. Reach out to a financial counselor through DCU’s Balance Program for help in making a payment strategy.
  • Building good credit habits – Once you’ve got your credit wrangled and your repayment strategy in place, set yourself up for financial success by maintaining good credit habits. Here are a few financial habits to help achieve your financial goals:
    • Pay your bills on time
    • Limit your credit card use
    • Track your spending habit
    • Check your credit score


Investing for the Future

Where do you see yourself in the future? Are you sitting on your back porch, looking over your yard while drinking a cup of coffee? Maybe you’re retired and walking the beach with your dog. No matter what your dreams are made of, it’s important to start investing now to pay for them.

Why is it important to invest? Investing puts your money to work. The more money you have invested, the more your money will grow. Suitable investment options depend on your needs.

  • Retirement IRA – If you’re willing to put your money away and keep your hands off it for decades, then an investment account such as an IRA is a great option.
  • CDs – If you want to make an investment for a shorter period of time but won’t need access to the funds on a whim, then certificate accounts are a higher-yield option than savings accounts with a lot less fluctuation than putting money in stocks.
  • Money Market – Earn higher dividends when you put your money into stocks and bonds. DCU’s insured market accounts are a safer way to invest your funds.
  • High-yield Savings Accounts – Accessible when you need them, high-yield accounts will make sure your money will keep up with inflation and then some. They’re a great way to put money aside while keeping it available for immediate use.

If you’re having trouble making investment decisions, you’re certainly not alone. Feel free to contact the professionals at DCU for help getting started.


Monitoring Progress and Making Adjustments

Any goal is something you have to monitor and track over the course of time. Financial goals are no different, except that tracking your financial goal progress might be a little easier. Reviewing your spending and saving is easy with banking apps.

If you want to better understand how much you’re putting away, DCU offers a savings calculator to help you figure out how much you’re actually saving each month when taking your dividends into account. It’s always rewarding to see your progress!


Overcoming Challenges and Staying Motivated

Say you’re a month into your financial goal journey. You’ve set the budget. You’ve started to put away money. And then it hits you. Your car needs repairs. You go out for a friend’s birthday and let loose. It happens! Here are a few tips for getting back on track:

  • Everyone gets off track every so often. Be prepared for obstacles by keeping a positive attitude about your goals and your ability to meet them.
  • Tell loved ones about your goals and ask them to keep you on track. Actively seek support from financial advisors.
  • Celebrate your milestones and recognize your achievements along the way.


Setting Yourself Up for Success!

Setting financial goals is a great way to set yourself up for financial success and security. From paying off debt to saving for retirement, your financial health will never suffer from moving toward a goal. Whether you’re starting from stage one and setting up a budget or you’re getting closer to retirement, know that DCU can help you set up and take action on your financial goals!


Frequently Asked Questions

  • Why is it important to set financial goals?
    Setting financial goals will help you build your wealth. Whether your goals are about paying off debt or putting away money, financial goals will help with your monetary health.
  • How do I track my progress effectively?
    Track your financial goal progress by regularly checking in on your spending as well as your savings accounts. Use a savings calculator to see how compound interest is affecting your savings.
  • What are some common mistakes to avoid when setting financial goals?
    Make sure to set your goals using the SMART method. Make sure your goals are realistic from the get-go!

Please note, membership is required to open a DCU Checking or Savings Account. Visit our membership eligibility page for more information.

This article is for informational purposes only. It is not intended to serve as legal, financial, investment or tax advice or indicate that a specific DCU product or service is right for you. For specific advice about your unique circumstances, you may wish to consult a financial professional.