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Setting financial goals can be tough. However, taking the time to be intentional about your financial goals could mean the difference between living paycheck to paycheck and thriving.
To set your intention for your financial goals, start by answering a few questions:
- What is your financial WHY?
- What would improvement in your financial life mean to you?
- How will areas of your life change if you meet these goals?
Your financial WHY is the foundation for your financial goals. Understanding how improvements will personally benefit you will inspire you to start your journey. While looking ahead to the future gives you the motivation to complete your financial goals.
Should you set financial goals for yourself? Absolutely. How to know what to set? I got you covered, below are the 6 financial areas to set monthly goals to ensure financial success.
Income
First, determine how much money you want to make this year. Some people have no idea how much they make in a year. According to Dave Ramsey, your income is your most valuable wealth-building tool. So use it.
This goal is especially important for women given the gender income gap worldwide. Women on average still make significantly less than men. According to a GOBankingRates survey, over 36% of women say lack of income is stifling their financial goals.
However, regardless of your income goals, diversification of income is important. In short, you need to have a steady flow of money coming in from more than one place. This could be in the form of a second job, a side gig, etc.
There needs to be a way to pay your bills if something happens to your main job. If there is anything that the pandemic has taught us, it is that income diversification is required to better shield yourself from economic downslides.
Tip
Start a side hustle or passion project. Along with the Great Resignation, the pandemic has also caused an increase in entrepreneurship. Now more than ever, people are stepping out on faith and following their dreams.
Figure out what ignites your fire. What are you passionate about? Is there a problem in the world that you would like to fix? If so, start a business to make a positive impact.
Debt Repayment
If you are out of debt, WOOHOO congratulations!!!!! You are one step closer to building generational wealth. For the rest of us, setting a debt repayment goal will help us get closer to wealth. If you pay any interest on debts, you are losing money. It would be better to invest this money.
In a consumer debt analysis by Experian, there has been an increase in debt amongst younger generations over the past year.
| 2020 | Change | |
| Generation Z (18-23) | $16,043 | +67.2% |
| Millennials (24-39) | $87,448 | +11.5% |
| Generation X (40-55) | $140,643 | +3.5% |
| Baby Boomers (56-74) | $97,290 | +0.3% |
| Silent Generation (75+) | $41,281 | -4.6% |
These numbers are astounding. All the more reason to make intentional changes now in the way you handle debt. Create monthly debt repayment goals to get you one step closer to financial freedom.
I have been on my debt-free journey since October 2019 and have been able to pay off my car, a credit card, a 403b loan, and pay down my student loans. I was even able to pause on debt payments to cash flow the birth of my daughter and to financially support my family during maternity leave.
With the limited maternity leave benefits in this country, I needed to set aggressive financial goals to not go into more debt and have the peace of mind to enjoy the limited precious time I could with my daughter.
Tip
EVERY LITTLE BIT HELPS. You do not have to have a large sum of money. But being more intentional with the money you have can go a long way. Pay $5-10 extra on your credit card bill this month (as much as your daily Starbucks habit). Skipping the specialty coffee 1-2 days a week will help you get out of debt faster.
Savings
Only 44% of adults have $1,000 in savings to cover an emergency, according to a Bankrate survey of 1000 adults. Most individuals would need to use debt, such as borrowing from loved ones or using a credit card.
Does this cause a lump in your throat? Do not fret. Make a few small changes today for a big impact tomorrow.
Over the last two years, I have been utilizing sinking funds which have been a tremendous help to our family. A sinking fund is a mechanism for saving money for future expected purchases. For a more detailed dive into sinking funds, check out this post from The Budget Mom.
I currently have sinking funds for Christmas, birthdays, auto insurance, private school tuition, and a new car. For these purchases, it is easier to save a little each month instead of paying hundreds or thousands of dollars at one time.
Also, creating categories for saving makes it much easier to save. So give your saving a purpose. Here are 22 savings tips from Ramsey Solutions. I have personally used 20 of these during my debt-free journey.
Tip
Participate in small savings challenges like the $5 challenge. This works well for all cash budgeters. You just save every $5 bill that you get your hands on.
Or make a game out of savings. I am currently doing a toll challenge. Every time I see a self-pay station at the toll booth, I save the toll amount paid.
Spending
Have a monthly plan for your money. You can call this a budget, spending plan, or money plan. Whatever makes you feel comfortable.
The bottom line is budgets are your best friend. They provide a plan for your money which is essential for overall financial success. In short, you have to tell your money where to go or you will never know where it went.
Even though budgets can feel restrictive, they can also be freeing. Once you set a specific amount of money to a category, you have the freedom to spend that money however you want.
While creating a budget at least monthly is important, checking in with that budget at the end of your spending period is even more important. Look at your expenses for the month compared to your budget in each category.
If you were at or below budget, this is great. If you are over budget, then make ] adjustments for next month to stay on track. Note that it takes at least 3 months to get used to a new budget, so give yourself some grace if things are not perfect right out the gate.
Tip
Set spending limits for your problem areas. For example, if you are frequently overspending on miscellaneous shopping, create a line item for it in your budget but make sure to give yourself a limit that you can afford. This will allow you to still indulge in shopping but not feel the guilt of spending too much.
Investment
Investing is one of the top ways to save for retirement and build wealth. When some people hear the word ‘investing’, the stock market is the first thing that comes to mind but there are other places to invest your money. Check out 12 Best Investments for Any Age or Income by nerdwallet, for ideas on where to invest.
If you are working for a company, check to see if your employer offers a 401k/403b retirement account. Some companies even offer a match. This means that the company will add money to your 401k/403b account if you are also investing a certain amount of your income.
THIS IS FREE MONEY. No one should say no to free money.
Tip
Try micro-investing. Tools like Qapital, Acorns, or Stash make it easy to start investing without a large sum of money to start with.
Literacy
It is never too late to learn something new. If there is a financial subject that you feel shaky about, go to the library and find a book about it. Improve your financial literacy to help you make sound financial decisions.
According to the Council of Economic Education, young adults who receive financial education are less likely to carry credit card debt. Therefore educating ourselves and then passing this information on to future generations is essential to building generational wealth. Let’s help the next generation make better money decisions than we have.
Tip
Spend 10-15 minutes a day reading a finance book. Or listen to an audiobook during your commute, exercise, or cleaning time.
Bonus Goal
Consider setting a financial mindset goal. Change your thoughts around money to curb your self-limiting beliefs. I have heard so many people say, “I will always live paycheck to paycheck.” “I will never have enough money to retire.” or “I will never get out of debt.”
With that mindset, you most certainly will not. Remove those negative thoughts from your mind to reach your financial goals and achieve financial success. If you do not believe in yourself, no one will.
I have an issue with accepting money from people. Or even taking things for free. For some reason, I feel like I need to work hard for things. My mindset goal is to stop believing that I have to work so hard and let my financial life feel free and easier this year. To break down those self-limiting beliefs and create a healthier relationship with money.
I hope this article helps you set achievable financial goals each month. If setting monthly goals in all six areas is too much at one time, consider setting goals in 1-2 areas. Consistency is the key. So start small and create a habit of setting and achieving financial goals today.
For more inspiration, check out this blog post and follow us on Instagram. Join our email list for additional enlightenment, inspiration, and tools/strategies to improve your life. If you need a personalized financial goal action plan or assistance with setting achievable financial goals, schedule a session today.
