Why You Should Set Financial Goals

Recently, I’ve been sharing our story of how we met last year’s financial goal of saving up to pay cash for our first home. While that goal might be unrealistic for you, I highly recommend that you make it a practice to set financial goals each year–even if they are seemingly “small” goals. We’ve been doing this for the past three years and have been completely amazed at what a difference this simple act has made in our lives.

Here are three reasons I believe everyone should set financial goals:

1) Goals Give You Purpose

“If you aim at nothing, you’ll hit it every time.” If you don’t have financial goals, there is little reason for being frugal, clipping coupons, or sticking with a budget. Goals, on the other hand, give meaning to your efforts.

When you have a purpose for why you are forgoing eating out or shopping at thrift stores or driving an old car, it’s much easier to stick with it for the long haul.

2) Goals Give You Accountability

We write our financial goals down at the beginning of the year and then review them throughout the year to track our progress. The exercise of discussing and writing down our goals forces us to be accountable–to one another and to the goal sheet. It’s a lot harder to go blow a sizable amount of money on a needless purchase when you know you’ll have to face that goal sheet hanging on your refrigerator.

3) Goals Give You Momentum

Tracking the progress of our yearly goals on a monthly basis is a huge motivation for staying on track. We’ve found that it’s helpful (and fun!) to break down our yearly goals into monthly bite-size chunks and then challenge ourselves to see if we can exceed those.

Sometimes, it can feel like you are spinning your wheels and getting nowhere. Just as soon as you save up enough money to replace the broken washing machine, the car breaks down. However, we’ve found that even if we’ve had a month with lots of financial setbacks, the goal sheet serves as an encouragement to us that we are making progress and going something–even if it’s at a slower pace than we’d hoped. And that always inspires us to keep at it!

Do you set yearly financial goals? If not, what are you waiting for? Mandi over at Organizing Your Way has some excellent input here to help you get started on your financial goal-setting journey.

photo credit: hpk

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Comments

  1. says

    Your goal-setting talk earlier this month encouraged me to sit with my husband to talk about a bigger goal for us. We’re now officially saving up to replace our kitchen. We bought our fixer/foreclosure in November 2008 and made a lot of home improvement progress last year, but redoing the kitchen will be a huge, huge improvement (think broken tiles, chipped paint and falling-apart cabinetry). We hope to save the money needed by next year.
    Oh, we’re also DR fans and have no debt but the mortgage and sinking funds for everything we do. We have a bigger mortgage than he’d recommend, but we live in the L.A. area on one income and are hitting all the financial goals we have for ourselves, praise God!
    Thanks for all you do to help us out, Crystal! Can’t wait to follow you on your house hunt, I really enjoyed the excitement of looking for our house. :)

  2. brookeb says

    I’m the bookkeeper in our relationship, and I tend to set major ticket purchase goals vs. general long term goals. So right now we save for 1) a new (to me) car, as a slipped timing belt killed mine last year and I’m currently driving an old town car a family member gave us, 2) a trip somewhere on our 5-year anniversary, and 3) a cushion to allow us to move to a new town. There’s very little wiggle room in our budget, as DH is still in college and my job doesn’t bring in a lot, but I do have the option of teaching extra during the summer to earn beyond my traditional salary. So honestly right now that is the plan for paying for the car, but at least that planning helps me get through the extra work.

  3. Delores says

    For a long time I have just sort of had mental goals for our finances, and for our homeschool. This past summer I really wrote out my goals for the kids’ (6 of them) education. We are not getting it all done, but it really helped me to focus on the long term and short term goals and assignments. This has definitely been our best year in terms of goals and accomplishments and staying on track. I have avoided budgets because I just fail at them — something always happens (I am sure you know exactly what I mean) and then I just give up. It is too hard to track, it is too hard to save, it is too hard to stick to a budget for grocery shopping, etc. But my experience with our homeschool helped me to realize that I will most likely be even more successful with some goals than with none! The hard part: my husband hates talking about this stuff. He leaves all the finances up to me and trusts me implicitly with them. Not that he doesn’t care about it overall, he just finds the nitty- gritty tedious and onerous. :) So I feel stuck. But even if I just set goals for myself (a grocery budget THAT I STICK TO is a good start), something is better than nothing! Thanks for this post — it has motivated me, even if it is to just write some goals down no matter how big or small.

  4. Christy McCullough says

    Thank you for all that you share personally. We are leading our 4th FPU class and try to add tangible things such as real ways to get your $1000 and suggestions on budgeting. All of you points are great. Would you mind if I printed it and shared it with my FPU class in the next couple of weeks. I will happily give you credit.

    BTW, in my couponing week I rave about your site and all the great deals it has gotten me. Loved my free Christmas cards!

    Thanks in advance.
    Christy

  5. says

    Yes we set yearly goals. My husband and I annually sit down in front of our computers with Quicken and talk about our budget. We discuss what months Iwill need to spend extra for birthdays, seasonal clothes, kids sports, vacations and holidays. We discuss how much we are aiming to save and what we are saving for. We commit to cooperating within the budget. Then we print it and I keep my copy and he has his in the computer and we check it monthly.

    This has a been a blessing to our marriage. As we openly communicate we find that it reduces tension over these things down the road. We both are on the same page with a common goal!

    Courtney
    http://www.womenlivingwell-courtney.blogspot.com

  6. says

    It really is amazing how setting up a budget and setting goals help you accomplish the goals you set! It has been an amazing year and a half. And as we start of the new year with new goals and a new budget to help us meet those goals, we are able to do more than we ever dreamed we could!!! :D I am so anxious for the rest of your story!!! :D

  7. says

    I am soooo on it! I am actually doing the program by Darren Hardy (Success Magazine) right now where you Design the Best 10 Years of Your Life! It has been so eye-opening! As I go through it, I see that it definitely gives you a sense of purpose and focus. So often we get sidetracked with things which makes it so easy to get off course! Before you know it, a couple of months or years have past and then you are stuck looking back like “what happened?”!

  8. Julia says

    Hey! I totally believe in setting goals too! We have set a goal to be debt-free in 9 years. I have been tracking this and if everything goes according to plan we are 8 months ahead of schedule! YEAH! And that is estimating low on some things. Thanks for the tip to break it down. I am going to try this. Thanks!

  9. TC says

    My husband and I sat down the other day and wrote down our “snowball plan”. It is hanging on the wall! :)

  10. Jessica Bish says

    We have set goals for ourselves this year. Within 2 years we would like to have our house paid off and become debt free within 3 years. Once the mortgage is gone – the only thing left are student loans! Yippee!

  11. Amanda says

    Hi! Thank you for this post. It has inspired me to sit down with the hubby and go over and set some small financial goals, and thanks for making it seem ok if they are small and simple goals, becuase that is about all we can do right now too. I’ll admit, everytime you posted about saving 100% for your home purchase, I was feeling jealousy and regret. We bought our home 3 years ago in CA, before the market had drastically reduced, and it made me wish we would have waited to buy when we had more saved.

  12. says

    My husband and I started making financial goals together when we began working the baby steps of Dave Ramsey’s Total Money Makeover. Our big goal now is to pay off our mortgage and be completely debt free!

  13. Chris from St. Mary's says

    Setting financial goals has really helped me. I got out of debt right as my mother was diagnosed with cancer and right around that time I found Dave. I got through BS 3 in six months instead of a year, then Mom died. A few months later, the inheritance changed everything for 2009. Between that and the real estate market crashing, I was able to purchase a nice, modest condo with cash this fall and had money to furnish it (I had no furnishings). Now that that’s done and the one-year anniversary of her death has passed, I’m settling down with new financial goals, ones I wouldn’t have dreamed of a year ago. But I need them or else I will only be treading water.

  14. Amara says

    Crystal,

    I would LOVE it if you created another yearly series with a linky for others to measure their goals…

    Your others were catchy and rhyming, but what rhymes with 10? :) The Love of Money is a Sin in 2010 doesn’t sound so hot. :) You probably have a much, much, MUCH better idea.

    OH! And I think it would be fun to know YOUR goals now that the big one (the house) has been met.

    Your new look here is so lovely, but will you still have your Amazon store?

    So many questions.

    One more thing…I think you need new outfits when you pose in front of the house that is 100% yours. AND I think the outfits need to match your blog. Just my two cents. :)

  15. says

    My husband and I set our financial goal to finish paying off our mortgage this year, which would make us completely debt-free! (We’ve been here 8 years this summer). It’s a bit of a stretch, but we think we can do it without eliminating our savings (which we need in case hubby’s car dies–it’s on its last legs!). Only by God’s grace, which we don’t deserve.

  16. Anna K. says

    Congratulations on meeting your financial goal last year! What a wonderful example your family is, and I truly believe we can accomplish what we set out to do. Our goal this year is to get out of debt and start a healthy nest egg so that next year we can save up for a house.

    If you knew how much we make as opposed to how much we owe, you’d think we couldn’t do it. But I believe by our hard work and the grace of God, we can. Thanks for the inspiration and best of luck to your family this year.

    I love coming to this site.

  17. says

    At our current rate, we’ll have our house paid off this spring. I’m curious–what will be your goal once you’ve got the house payment “made”? We need some goals, but I don’t have any ideas what comes next….Dave has lots of advice for the early part of the money map, but what do you do at the end??

  18. says

    Thanks for your posts on finances. Your example has inspired both my husband and myself to sit down and look at our finances more closely. We’ve even decided to do the snowball payments recommended by Dave Ramsey and found that we can be debt-free (including our home) in six years.

    Thanks to this post specifically, we now have a payment plan on our refrigerator for each month of the next 6 years so we can mark each month off and see where we are, how far we’ve come, and how much farther we have to go. Thank you!

    By the way, I have given you an award and it will show on my blog tomorrow morning.

  19. says

    Thanks Crystal for yet another inspiring post. My husband and I have a very clear present goal, to pay off our debt by May of 2011. He has gotten a small second job and I have gotten a small part-time job (15 hours) to pay off our credit card debt and have an emergency savings account. We are really striving for this and trusting the Lord that it will all be paid off so we will be free to do whatever He calls us to next. Thanks again for sharing, it reinforces what we are currently doing!

  20. Lynne says

    Hi Crystal,

    I also would like to see the Mr. Linky again this year with everyone’s
    financial goals and progress. It’s real encouraging to me when
    I read how everyone is doing with their goals.

  21. says

    For the last few years we’ve been tracking our spending and budgeting, which has been a real eye-opener for us. It’s also good for bonding, for us anyway – we feel like nerds as we look forward to budgeting each month. The most positive thing about all of this is that we’ve both been able to set long-term goals with our savings, which makes it easier to save in the long run.

  22. says

    You have inspired me to not only write down my goals, but to start my own blog about our family’s journey on getting out of debt. I am the bookkeeper of the family and when I try to discuss finances with my husband he doesn’t seem interested. He wants us to be debt free, yet he doesn’t want to sit down and discuss budgets and such because I am the one who pays the bills and handles the finances. I’ve started my blog to hold myself accountable and honestly to have someone to “talk” to about our finances – even if I’m simply writing to myself. Thank you for your website, you’ve truly been an inspiration. Congratulations on reaching your goal of saving 100% for a home. That’s really something to be proud of.