How to set financial goals in 6 steps

At-a-Glance:

• Setting financial goals is beneficial for all, but especially if you’re new to managing money. 
• Both short-term and long-term financial goals play a role in building financial stability.
• A six-step framework can help you set financial goals—reviewing finances, tackling basics such as debt or emergency funds, categorizing goals, setting timelines, getting started, and checking in regularly.
• Financial goals should reflect your values and lifestyle—not what others are doing—so they stay meaningful and motivating.
• Spruce makes setting goals easy, visual and actionable with features like customized saving goals and budgeting tools. 

Creating a financial plan can seem overwhelming, especially if you’re new to managing money. But if you break it down into separate building blocks—meaning tackle your financial goals one by one—things get more manageable. If you’re a financial newbie, you might feel like you don’t have enough money to set meaningful financial goals.

But for real, no matter where you are in your financial journey, setting financial goals can help provide guardrails for your spending and saving decisions. Ready to get started? We’ll cover how to set financial goals in a few simple steps.

Financial goals examples

Talking about financial goals can sound lofty or extra and even out of reach for many people. For some, it may not even be clear what a financial goal looks like. Is it a number, a status, or a feeling?

To give us a starting point, we can break it down by timing, into two main types of financial goals: short-term and long-term.

Here are some financial goals examples to get your wheels turning.

• Short-term financial goals, such as setting up a monthly budget, putting a deposit on an apartment, or saving for a laptop, can be knocked out within a year — or even this week! Other examples of short-term goals could be to start an emergency fund, start paying down debt, or start investing.  
• Long-term financial goals might take several years, or even several decades, to complete. They include items like paying cash for a car, saving for a down payment on a home, and saving for retirement.

Spruce helps make saving toward your goals easy and helps with some of the emotions that come with financial planning by giving you small but concrete ways to move forward. For example, the saving goal feature lets you name your goal and choose a photo to visualize it, then watch as you grow closer to meeting your goal. It’s like a vision board for your money, with handy tools that help make it a reality.

6 steps to set financial goals

In the six steps below, we’ll explain how to define your personal financial goals, or if you’re in charge of your family financial planning.  

1. Review your finances. Before you set your financial goals, figure out where your finances stand today. Creating a budget can help you understand your cash flow, track your income and expenses, and find places to trim so you can start putting money toward your goals.

2. Cover the basics. Working toward a few primary financial goals will help lay a solid foundation for your financial plan. Reducing debt and building an emergency fund are great places to start. Aim to put a little extra money toward your debt each month, especially high interest credit card debt. It’s also important to establish an emergency savings account and save three to six months’ worth of expenses. This will help you cover unexpected costs, such as medical bills or a new transmission, if they crop up. 

3. Divide goals into long-term and short-term. Divide your goals into long-term and short-term financial goals. Doing so can help you prioritize which goals to take on first. Also, short-term financial goals often help unlock long-term goals, with a series of small steps adding up to bigger financial moves. For example, a shorter-term goal of improving your credit, can help with a longer-term goal of getting a more affordable home loan.

4. Set a timeline. Give each of your goals a timeline and outline the steps you need to take to reach it. Saving $150 for a pair of wireless headphones? Make it easier on yourself and break the goal into smaller parts. For example, you could save $25 a month for the next six months.

5. Get started, but be realistic.  As you plan and work toward your goals, they should make sense for you and your values. If you have no desire to go on a luxury vacation, don’t save for one — even if it’s what all your friends seem to be doing. Create goals that align with what you want your life to look like and be clear about why you’ve chosen them. Once you know where you’re headed, get started! Start budgeting, saving, or “doing” whatever tasks are needed to reach your goal.

6. Make time to check in. Put your list of goals somewhere you’ll see them often, so they stay top-of-mind. Regular check-ins can help you keep your financial goals on track. When you check in depends on the goal. Short-term goals might need weekly or monthly check-ins, while you might review long-term goals every six months or each year. If you find you need a little extra time to complete a goal, or if you’re ahead of schedule (congrats!), adjust your goals and timeline as needed.

Examples of financial goals in real life

Now that you have the steps to creating financial goals securely under your belt, here are some examples of financial goals in action.

Let’s say your goal is to create a budget that accounts for the money you earn and spend. Using the steps above you can plot out what’s needed to accomplish this goal.

• Set a timeline: This is a short-term goal, so you may decide to complete your budget within the next month. Write your goal down in a place you’ll see it frequently.
• Get started: Now, it’s time to crunch the numbers! Add up your sources of monthly income. Next, add up your necessary expenses, such as how much you spend on rent, utilities, insurance payments, and groceries. Subtract this number from your income, and you’ll arrive at your discretionary spending. This is the money you use for seeing movies or taking vacations. It’s usually where you can trim first when looking for extra cash to put toward savings.
• Make time to check in: Set reminders to review your budget every month, and make changes as needed to help ensure you meet your financial goals. Spruce users: Just tap into the app at the end of the month to see how you’re doing.

Here’s another example. Say one of your financial goals is to save for a beach vacation in 12 months. Following the six steps above can break it down into actionable chunks.

• Get started: Make the goal as specific as possible by determining the estimated cost of your dream vacation, including flights, accommodation, meals, and activities. Add a buffer for unexpected expenses. Then, create a dedicated savings account specifically for your vacation fund to avoid temptation to spend the money.
• Set a timeline: Break down the total amount of money you’ll need to save into manageable monthly contributions. For instance, if you’d like to save $1,200 for the trip, aim to set aside about $100 each month.
• Make time to check in: Stay motivated by checking in regularly. Adjust the amount you save each month as needed if you find yourself ahead of or behind schedule.

Setting financial goals with Spruce

Spruce has your back as you set up financial goals and work toward them. Spruce takes the pressure out of managing your money, allowing you to quickly and easily:

• Set up a budget. Spruce’s budgeting feature simplifies the process of setting up a budget to help you stay on track. It automatically categorizes your transactions and lets you choose which areas to keep a closer eye on with the Watchlist. Get friendly reminders when you’re close to your spending amount in a certain category, or when you exceed it.
• Understand how much to save. Spruce has a handy savings goal calculator that allows you to see how soon you can achieve your financial goal when you commit to saving regularly. 
• Start saving. The saving goals feature from Spruce can help make saving easy. The Spruce app lets you identify and name your goals, then you can consistently put money away for an emergency, a vacation, or even a big purchase on your long-term financial goals list. You can even choose to transfer money to your saving goals automatically. Plus, Spruce’s Round Up feature can help you save small amounts and pay yourself every time you make a purchase.

Start an account with Spruce today

From setting saving goals to making budgeting painless, Spruce has many features that can help you manage money and reach your financial goals. Plus, there are no monthly or sign-up fees and no minimum balance requirements with Spruce, so you can keep even more money in your pocket.

Get started with Spruce!

This information provided for general educational purposes only. It is not intended as specific financial planning advice as everyone’s financial situation is different.