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5 Tips for Setting Financial Goals

September 15, 2022 • Adulting

Starting a journey to a healthier financial future can be daunting. Before getting lost in the weeds trying to figure out each step that will ultimately get you to your dreams, setting your overall bigger financial goals is key. 

Zooming out is important to help you see the whole picture. While it is important to keep up with the day-to-day tasks of keeping up your personal finances, if you don’t have a clear goal you are working toward, you can miss opportunities to make healthy financial decisions. 

These five tips will help you focus on what you want to get out of your financial goals, while maintaining a balance between dreaming big as well as realistically. 

1.Take time to think!

Sitting down and taking the time to think about what you value in life and how it correlates to your finances is a great starting point when setting financial goals. So often, we can get caught up in the busyness of life and forget to pause and think about what we really want. 

Especially when it comes to finances, it is hard to take a break from spending on daily necessities to realize where you currently stand financially. And beyond that, taking time to dream about where you want to go will help you better align your financial plan to your values. When you think about what you value in life, what comes to mind? Family? Security? Community? Adventure? 

Once you have identified what you value in life, start thinking about how that applies to your finances. For example, valuing travel would correlate to making a goal to have money set aside for vacations. Then, find the best option to start saving for vacations, like with Canopy’s Summer Club Savings account. Thinking creatively about what you want your goals to be can also help you start this intimidating process. 


2. Focus your goals

Getting specific about your financial goals will help you plan better. Instead of having the goal to “save money”, narrow in on what exactly you want to save and for what. By being more detailed in what you want your ultimate outcome to be, the more likely you will be able to continually grasp your goals. Having clear goals will prevent you from straying away from the plan when times get tough. 

Answering these three questions can help you define your goals: 

  • What is an important purchase/financial decision that I need to make?  
  • How much will it cost?
  • How soon do I need the money?

Your answers to these questions will give more direction to where your funds should be funneled. For example, your goal could be to buy a new car. First, you need to find out how much it will cost. Next, you need to find out how much money you need for a down payment and information on a loan and monthly payments. Having all those details will allow you to better focus on the overall goal of buying a new car. Sitting down with a team member from Canopy is a great way to learn the answers to those questions. 

Financial goals can vary from a specific purchase to general education. Examples of financial goals include:

  • Creating a budget
  • Saving for retirement
  • Building good credit
  • Improving your financial literacy
  • Paying off debt

Don’t spend too much time worrying if you just have a generic idea of a financial goal rather than a concrete plan. While it is helpful to have more information, starting with what you have is better than not starting at all!


3. Prioritize your plan

Once you have brainstormed the different areas of life that you value that need to be supported by your finances, the tricky part of prioritizing comes into play. First, identify which of your priorities fit into short-term, mid-term, or long-term financial goals. 

  • Short-term goals are for financial priorities that have a shorter timeline. Examples include paying for a graduate degree, buying new furniture, and reevaluating your spending to get rid of unnecessary costs.
  • Mid-term goals are defined as tasks that will take three to five years to complete. Saving for a downpayment on a home, funding a wedding, or saving for an epic vacation are examples
  • Long-term financial goals consist of funding your retirement, living without any debt, or building an estate to leave behind. 

Now, just because something is a short-term goal doesn’t mean it is a higher priority than a long-term goal, or visa versa. Answering these questions can help you order what are your most demanding financial priorities.

Are you in danger of losing your car or home?

  1. Do you have adequate insurance coverage?
  2. Do you have enough emergency savings?
  3. Are you getting the full match in your employee’s retirement account?
  4. Do you have high-interest debt?
  5. Are you planning to buy a home?
  6. Are you on track for retirement?
  7. Do you have upcoming education expenses?

Your answers to those questions will help you prioritize what you need to tackle first. For example, if you are in danger of losing a car, that will take precedence over making sure you are on track for retirement. The most time sensitive ones will likely become your highest priority, so make sure you are continually checking in with your prioritize as things might change over time. 


4. Be SMART! 

Now that you know which goals you want to focus on first and which ones will take more time, it is time to flesh out each goal more. Using the SMART goals outline can help you make effective short-term and long-term financial goals. 

  • Specific: Clearly state what you hope to accomplish with your goal. By having focused goals, you will be better equipped to execute your financial goals and get what you want.
    • For example, instead of “improving financial literacy”, a specific goal would be to “learn more about investing in my retirement with a financial coach and online resources.” 
  • Measurable: Create structure in your goals with quantifying pieces so you can easily see your progress. 
    • Instead of “I want to save money for a new car,” set a goal that states “I want to put $100 aside each paycheck to save up for a down payment on a new car.”
  • Attainable: While dreaming big isn’t a bad thing, it is important to be realistic when it comes to finances. Don’t set your expectations too high. Instead create achievable steps that will bring you sure success. 
    • Goals like, “becoming a millionaire overnight” likely won’t be the most productive.
  • Relevant: Make sure to have your goals align with the bigger picture of your finances. Prioritizing different spending needs to align with the rest of your plan will help you make wiser choices.
    • Having a goal to buy a vacation home in Mexico may not make sense if you are still paying off your current home. In this scenario, maybe trying to take that value of travel and focusing it a different way through planning a vacation.
  • Time-bound: Decide on a set time frame to complete this goal. Often, projects that are open-ended without any time constraints take a long time to achieve or aren’t completed at all. Put some “fire” underneath you and give yourself a deadline. 
    • Instead of saying, “in the next few years, I want to be debt free,” create a time-bound goal like “Over the next four years, I will work to become debt free.”


5. Stick to the plan

Now that you have set your financial goals, it is important to stick with your plan. By writing down your goals and putting them where you can easily see them, like on your fridge or in your car, you will be consistently reminded about your purpose and drive. 

It is up to you to take action and follow through with the financial goals that you created. But, you are not in this alone. Canopy has financial coaches waiting to meet with you to help you set your own financial goals. With a good plan and personal commitment, you can achieve your financial dreams. 

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