How to Set Financial Goals and Begin to Invest in Your Future

Estimated read time: 4 minutes

Setting goals is imperative to bringing the future you dream of to life. If you set specific goals and work towards achieving them, you are more likely to end up where you want to be than if you just wing it along the way.

Step 1: Set Financial Goals that Work for You

Everyone needs to set financial goals that work for them specifically. We all have different dreams, so we will all take different routes to get to our idealized future. That means we all need unique financial goals, too!

The first step to setting your financial goals is to determine what is important to you and your family. What do you hope your future looks like? What do you need to do to get there, and how are you going to do those things? What needs to change with your current financial habits to help you achieve these goals?

Your financial goals should be specific and measurable, as well as realistic. You will need to have an honest understanding of your income and budget to be able to set accurate financial goals that will work for you, especially if you're the breadwinner. If you have big goals, it might be time to take a hard look at your budget and rework it in a way that will free up more money each month to put towards your goals.

You should set both short term and long term goals, and you should regularly re-evaluate both your goals and your progress. Sometimes, dreams and plans will change, and that means your financial goals might change over time, too. That's okay! The key to setting goals that work for you is remembering that what works for you now might not work for you in six months or ten years. Regular re-evaluation of what is and isn't working is key to actually achieving your financial goals.

Step 2: Prioritize those Goals

Each time we spend money, we are making a choice in what we want to prioritize. In choosing to grab fast food on the way home, we are making the choice to prioritize convenience now over something else in the future. Of course, it's absolutely okay to do this within reason!

When you start getting serious about your financial goals, however, it will involve prioritizing them more often than not, even when it's not always fun or easy. Paying your future self first is the best way to keep this a priority in your budget. Set up an automatic transfer to your investment account or savings on payday, so the money is automatically put towards your goals before you can talk yourself out of it.

Start out by focusing on the short-term goals that can actually help you achieve your long-term goals. Maybe you want to sign up for a credit card that offers rewards, so you decide to look for the best cashback cards available. Responsible credit card usage can improve your credit score, which can help your longer term financial goals if they involve getting a loan. The cash back you earn can also be put into your emergency fund or deposited directly into your investment account.

You can also make short-term investments with a goal of using the money you make on it to achieve one of your larger goals. If you are looking at making a large purchase or starting your own business, consider making a short-term investment that will pay out a lump sum that can be put towards this longer term goal.

Prioritizing your financial goals will probably require some creativity and making some difficult decisions. Keeping your eye on your goals (and making sure they are realistic) will help you stay on track towards a better future for yourself and your family.

Step 3: Investing for Beginners

Your specific financial goals, both short-term and big picture, are going to shape what investments might be better than others for you. Having your specific goals in mind, as well as an approximate timeline for meeting them, will help you identify what investments you should consider.

Assuming retiring one day is a goal of yours, it's a great idea to begin with a 401(k) as soon as you're eligible. Investing in a 401(k) is a great place for beginners as it makes it relatively easy for you, and your employer may provide access to an expert who can help you make decisions and get everything set up.

Many employers will match what you contribute, and if you don't take full advantage of that, you are literally leaving money on the table. This is an example of prioritizing your financial goals: contributing the maximum amount that your employer will match might make your monthly budget a bit tighter now, but it will help you achieve your goal of retiring comfortably someday.

Beyond a 401(k), there are plenty of other investment options for beginners: buying a house meets a need for yourself but is also an investment, signing up for a robo-advisor that helps you start dabbling in the stock market, or purchasing bonds, to name just a few.

Vision for the Future

When you are creating your financial goals, make sure you are doing so with investing in mind. Think about what investments can help you reach your short and long-term financial goals quicker, and include investing in the action steps for your goals.

Goal setting provides a vision for your future, and setting financial goals helps you determine what your financial situation will look like down the road. Investing time and money into setting and achieving goals now will pay off in the future.


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