How to set financial goals: 5 Steps that actually work

05 August 2021
How to set financial goals:             
5 Steps that actually work

Here’s a universal secret. Every-time an interviewer mind-numbingly asks ‘where do you see yourself in 5 years’, the truth is most of us have a general perhaps vague idea. That’s just the truth. The reality, however, is that most of us fail to achieve such goals unless we have a robust and fully-functional PLAN OF ACTION to go about executing this.

We know financial planning can be daunting, especially if you’re doing it for the first time- so bust out your pens and papers (or notes app and calculator) and let’s get cracking. By the time you are done reading this you will have a rough plan with some specific financial goals!

Step 1
What comes in, what goes out?

Let’s start with a budget

We are going straight to the hard part. The hallmark of any good financial plan is a solid budget. This is the bedrock your financial future depends on, which is why it’s got to be perfect.

Take account of your income and expenditures and see how much you spend on average. Consider all variables such as regular important payments, bills, utilities, entertainment and of course cash to keep in hand- before you arrive on a number you are comfortable with.

Analyse your statements for the last 3 to 4 months to arrive at a budget you are going to realistically be able to stick with.

Because remember;

Investing starts with saving, and saving starts when you have a budget
Step 2
Who, What, When

Now let’s discuss timelines

Now that the hard part is over, think about those goals again, write them down as a list and against them determine whether they are within reach, something you want a few years down the line or long-term goals that you eventually want to achieve in the distant future.

A helpful guide for this is -

Any goals between 0-2 years classify as a SHORT-term goal,

Any goals between 2-5 years classify as a MID-term goals,

Any goals over 5 years classify as a LONG-term goal

Step 3
Work SMART, not hard

Set plans the SMART way

If you're as ambitious as us and are ALREADY feeling overwhelmed over the gigantic list of goals you’ve set up for yourself, we’re flying to your rescue 🦸🏻‍♀️

Take a few deep breaths and apply SMART to your goals. What’s that you ask?
SMART stands for Specific, Measurable, Achievable, Relevant and Timely a.k.a a simple way for you to weed out the goals that REALLY matter to you (and those that don’t)

Take your list of goals again and see if they pass the SMART criteria!

Step 4

Make savings second nature to you

Now you’ve created your goals, you’ve even classified them and made sure that they are really something worth working towards…but there’s a problem you suck at saving, now what?

It’s not the end of the world, you simply have to create a system that helps you make wiser financial decisions.

Here is where you can use technology and automation to your advantage- you could create a separate account that automatically redirects spare money you save each month or you can choose to up your game with Stack too!

If you struggle to stay on budget or save consistently, you can create Stacks for each of your goals and set up one of our Rules like ‘Set & Forget’ or ‘Pay Day’ which automatically set apart some of your money, each month towards your goals.

With practice and patience, saving and investing will definitely become something you can ace!

Step 5

Every Plan-A, Needs a Plan-B

The final and often overlooked step of any financial plan is to routinely sit down and re-assess your plan. See whether it's actually working, whether it makes you happy or whether it's restricting and needs more fine-tuning.

Monitor your progress and see where you can do better- and make those adjustments accordingly.

And just like that, you are the (wo)man with the plan!!!

Try out Stack to not only help you stay on track with your financial goals, but actually achieve them faster!