Every great achievement starts with setting a goal and taking aim at a target that aligns your present self with the future you have dreamed of.

Whether it’s hunting for food, leading an army into battle, or saving to buy a new home, setting goals is fundamental to the success of the human species. It enables us to strategise, prioritise, and achieve desired outcomes for both immediate survival and long-term prosperity.

In the realm of financial planning, setting goals allows you to build a roadmap to stability and fulfilment. Your financial goals help ensure your life reflects your values and principles while you realise the life you have always wanted.

Read on to discover six practical steps for setting financial goals that help you achieve your life ambitions.

1. Assess your current financial situation and create a savings budget

To set ambitious and effective financial goals, you first need to understand where you are relative to where you want to be. So, before envisioning your dreams, it’s wise to have a clear picture of your current financial standing.

Begin by reviewing your savings, investments, and pension pots, and assess their current value and projected growth. Consider how far they are from where they need to be to offer you lasting support in the pursuit of your goals.

You can then assess your income and expenses from the past few months to gain insight into your current spending patterns.

Make a list of essential expenditures, such as mortgage or debt repayments, utility bills, and other non-discretionary costs. Then, evaluate your non-essential spending to see where you can potentially save and reinvest to help bring you closer to your objectives.

A financial planner can work with you to create a comprehensive savings plan based on your goals, your current standing, and your time horizons. They can also explore appropriate options for investing the money you save to maximise your returns and bring you closer to achieving your goals.

2. Visualise your future

Creating financial goals is about imagining a future based on your principles and ideals and finding a way to structure your finances to realise that vision.

Begin by envisioning your ideal lifestyle, considering aspects like homeownership, travel, family, and retirement. Reflect on what is important to you, which could be broad principles such as security, freedom, or philanthropy, and let these principles shape your financial goals.

By aligning your financial planning with your values, you can set meaningful, achievable objectives that not only support your desired future but also resonate with your personal beliefs and priorities.

A financial planner can use cashflow modelling to help you see how your future financial position may look and determine if you are on track to achieve the future you’ve envisioned. If you are not on track, they can also recommend changes you could make now to reorient yourself toward that vision.

3. Create SMART goals and divide them by time frame

When setting goals, financial or otherwise, the SMART acronym can be good for helping to ensure your objectives are ambitious, achievable, and purposeful.

SMART goals are:

  • Specific – your goals should be well-defined and unambiguous.
  • Measurable – the best goals have determined criteria that you can use to measure your progress toward achieving them.
  • Achievable – while being ambitious with your goals, they must also be attainable and not impossible, otherwise you only set yourself up for failure.
  • Relevant – each goal should be aligned with your principles, purpose, and other life or financial goals.
  • Time-bound – goals need a defined timeline for achievement, or you could end up postponing them until it’s too late.

Though each of your goals will have its own time horizon, you can broadly divide them into three time frames:

  • Short term – you can achieve these goals in around a year, and they might include saving for an annual family holiday or building an emergency fund that covers your expenses for six months.
  • Medium term – it might take you around five years to achieve medium-term goals, which could include paying off outstanding university debts or saving for your child’s education fees.
  • Long term – these objectives take more than five years to reach and involve significant milestones, such as buying a holiday home in 10 years’ time or aiming to retire at 60 with a £35,000 income.

A financial planner can help you assess your savings and investing options suitable for your goals and their time horizons.

4. Break your goals down into targets and measure your progress

Breaking your goals into smaller, measurable targets allows you to:

  • Track your progress effectively
  • Stay motivated by celebrating small wins
  • Make adjustments as needed to stay on course toward achieving your larger financial objectives.

For example, if you have a goal to have a £1 million pension pot by the time you’re 65, you can break that goal into annual targets within a clear time horizon to help you keep on track.

You can then periodically measure your progress and have clear metrics to determine if you are on course to achieve your objectives.

5. Revise your goals as circumstances dictate

Staying focused on your goals is vital to ensuring you achieve them, but you may need to revise some along the way.

For example, you may have another child or grandchild, meaning you develop new goals based on saving for them and their future. You might also inherit some money, which you could put towards achieving one of your long-term goals early, allowing you to save more for other objectives.

Or you may run into unexpected financial difficulty, which could lead you to push back the time horizons of some of your longer-term goals.

Life is full of unexpected twists and turns, and it is wise to be adaptable. So, regularly revising your goals allows you to stay aligned with your evolving circumstances and ensures you remain on track to achieve your long-term aspirations despite any changes or challenges that may arise.

6. Speak to a financial planner

A financial planner can work with you to create a holistic plan that encompasses your life goals, finances, and principles.

They can provide expert guidance in areas such as budgeting, saving, investing, and retirement planning, ensuring that each element of your plan aligns with your overall objectives.

By taking a comprehensive approach, a financial planner helps you navigate complex financial decisions, adapt to changing circumstances, and stay on track to achieve both your short-term and long-term financial goals.

To speak to a financial planner, get in touch.

Email info@perennialwealth.co.uk or call 0117 959 6499.

Risk warnings

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate cashflow planning.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.