Realistic financial goals are attainable, practical, and based on your present financial standing and prospects. These are goals that you can realistically expect to achieve with diligence and hard work; they are neither wishes nor dreams.

A goal needs to be in line with your financial capacities to be considered realistic. For example, if you make $50,000 a year, it might not be realistic to aim to save $1 million in a year. It might be more feasible to set a goal to save $5,000 or pay off your debt by a specific percentage. Realistic goals are based on your financial situation and take into account your income, expenses, debts, and savings.

In addition, realistic goals are flexible. They are flexible enough to accommodate changes in your financial status. Since things happen unexpectedly in life, your goals should be flexible enough to account for things like a new job, unforeseen expenses, or changes in the economy. This adaptability keeps you from giving up if things don’t work out exactly as you had hoped.

Characteristics of Achievable Financial Goals

First of all, they are specific and clear. A specific goal would be, “I want to save $150 a month,” as opposed to a general one like, “I want to save more money.” It’s easier to plan and act when there is clarity.

Secondly, they can be measured. You ought to be able to monitor your progress toward your goals. If your goal is debt reduction, you ought to be able to calculate the amount of debt you have paid off over time.

Thirdly, achievable goals have a deadline. Whether it’s saving a specific amount by year’s end or paying off a debt in three years. Setting a deadline makes things feel more urgent and keeps you concentrated.

Finally, they are relevant to your individual financial needs and goals. Whether you’re planning to buy a house, pay for school, or save for retirement, your goals should match your long-term financial strategies. This relevance guarantees your efforts are directed toward what is most important to you and your financial well-being.

Start By Analysing Your Current Financial Situation

This is referred to as a personal financial audit. Consider it as sort of like putting all of your cards on the table so you know exactly what you have. Begin by compiling details of your income, monthly expenses, debts, and savings. 

After obtaining this information, evaluate it. What is the amount you make every month? Where does your money go? Do you have any outstanding debts? Setting goals that are realistic and attainable rather than merely wishful dreams requires an understanding of these specifics. This step is all about getting a clear picture of your financial situation and understanding it without bias.

Short-term vs. Long-term Financial Goals

Short-term goals could span up to three years and are essential for achieving immediate financial stability as well as laying the foundation for achieving greater long-term goals.

Long-term financial goals are those that you want to achieve in more than three years. They call for more preparation, time, as well as resources. These goals may include planning for retirement, purchasing a home, and paying for your child’s education.

Examples of Short-term Financial Goals

Short-term financial goals are usually immediate and tangible. Here are some common examples:

• Building an Emergency Fund
• Paying off Credit Card Debt
• Saving for a Vacation
• Starting a Side Business
• Improving Credit Score

These short-term goals are not just about achieving something tangible; they are also about cultivating financial discipline and preparing you for the bigger, long-term goals. 

How to Create a SMART Goal Template

Having a template is helpful if you want to use the SMART framework in your financial planning. You can use this template as a guide to help you break down each goal. Using the example of creating an emergency fund, let’s create a basic template:

• Specific: “I will save $3,000 for an emergency fund.”
• Measurable: “I will track my progress by checking my savings balance monthly.”
• Achievable: “I will save $250 per month by cutting unnecessary expenses.”
• Relevant: “This fund will cover any unexpected expenses, which will reduce my need for loans.”
• Time-bound: “I aim to achieve this within 12 months.”

Staying Motivated and Adjusting Goals When Necessary

In your financial journey, it’s important to stay motivated. A useful technique is to break down your bigger goals into smaller, more manageable ones. As a result, the process will seem less overwhelming and you will feel more accomplished when you reach each small goal.

Another effective motivator is visualization. Consider how reaching your financial goals will affect your life. Whether it’s the freedom that comes from being debt-free or the security of a substantial retirement fund, looking at the end goal can help you stay focused and motivated.

When and How to Revise Your Financial Goals

When revising your goals, consider your current financial situation. Do you still think your goals will be achievable? Are they in line with your current situation? Adjust the timelines, amounts, and even the nature of your goals as needed.

Making the most of any setbacks is also crucial. Look into why you didn’t achieve a goal. Was the goal unattainable? Were there any unforeseen expenses? Make better use of these insights the next time you are setting goals.

Conclusion

A great way to set a realistic and stress-free goal in managing your debt is to seek help. Seeking help isn’t a sign of weakness, it shows you embrace critical thinking and know when to get the much-needed help you deserve. By speaking with one of our debt experts at EmpireOne Credit, your debt can be reduced by up to 80%, and interest will stop immediately. Call us at (416) 900-2324 to schedule a free consultation with us. Being debt-free feels good!