Financial Goal Setting: Where to Start

Setting realistic, effective goals is an important skill that takes time to hone. This can be especially true when looking at your financial big picture and mapping your money priorities to reach a significant milestone or goal.

Our bankers at Rockland Trust have helped thousands of people at various stages of life achieve whatever is most financially important to them. Here are some tips and tricks that we have learned along the way to get you started in creating your financial goals.

Dream Big, But Start Small

When mapping out your financial future, you should think about creating a few types of goals. There will be really large goals that may be longer term - such as buying a home, paying off student loan debt, or retiring comfortably. Sometimes these goals, or even savings goals like saving for a new car, a wedding or your child’s college education, can be daunting.

To make the process more manageable, consider breaking a big goal into smaller goals that can help chip away at your ultimate aim. For example, you may consider working to raise your credit score so you can get the most competitive mortgage rate, or get impulse spending under control so you can fund that big vacation.

One proven method for goal setting is to make your goals SMART. This acronym stands for: Specific, Measurable, Attainable, Relevant, and Time-bound.  Creating a SMART savings goal might look like: “I want to put aside 10% of my income per paycheck into a Money Market account for the next six months in order to purchase a new car before the end of the year.” Writing goals in this way increases the likelihood that you will achieve that goal. 

Take Stock of Your Entire Financial Picture

After making a new financial resolution, it's important to understand exactly what your financial picture looks like. Not only can this exercise help you in creating financial goals, it can also help you in measuring progress.

This goes beyond knowing your expenses and income. You will want to consider not only where you are right now, but what milestone or goals you have in the near future and over the long term. First, look at balances across your accounts, make a list of valuable assets, and take note of any debt. Next, prioritize your expenses, savings and investments in order of what matters most to you and makes the most sense for your long-term plans.

Expenses can be bucketed into fixed expenses, like rent, a streaming service subscription or student loan payments, and variable expenses, like groceries and gas. While items in both categories are likely necessities, fixed expenses are predictable in amount and when they are due. As the name suggests, your variable expenses fluctuate and you may be able to scale back to meet a savings goal, for instance.

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Don’t Let Perfection be the Enemy of Progress

If you have ever had the drive to stick to a New Year resolution dissolve by the end of January, you understand that motivation is not constant and there may be hiccups on the road to your goal. Remind yourself that no one is perfect, and that small slip ups should be expected. You have the power to stop an accidental Amazon shopping spree or splurge at brunch from derailing you. Measuring your progress, in a chart or other way, can give you a much needed extra boost of confidence. You got this!

Set Aside Time to Check In and Revise

Your life and priorities may change over time and that can impact your financial goals. What you decide today is not set in stone and can change anytime you want. If you got a big raise and were living comfortably on your old salary, consider plunking those extra funds into your retirement accounts to take advantage of compounding interest. On the other hand, if you were planning a big overseas vacation this year, but your car now needs a new transmission or your house needs a new water heater, your timeline for that trip may need revision. Set aside time regularly to review your smaller goals and how they contribute to your big-picture financial plan.

You Don’t Have to Do It Alone

Managing finances and planning for the future is a big task, but luckily you don’t have to do it all on your own. Our financial planners and banking experts have years of experience in helping people from all walks of life achieve their goals.