Ultimate Financial Goal Setting Guide

Andrew Holliday
September 5, 2020

Guide to Financial Goal Setting

With a full picture of your financial situation, you are ready to think about where you want to go from here. Again, we can frame this in the context of short, medium and long-term.

Setting Short-term financial goals

Short-term goals may be along the lines of the following:

Setting a budget, or reviewing an existing one – do you make enough money to cover your expenses and save money on top of that each month?
- This is probably the most important step in the entire process, as all of your financial goals will ultimately be driven by how much money you have leftover after you cover your living expenses (and retirement account contributions!) each month. Check out our Budgeting and Saving guide for a deep dive on what to look for here!
Build up an emergency fund in your savings account
- The amount you think you want in here is a personal decision for you. Accepted wisdom is 3 months of expenses, but many people are beginning to extend this to 6 months or even a year.
Paying down or refinancing high interest debt, such as credit card debt
- Maintaining high interest debt balances for months at a time can be crippling to personal finances. Sometimes, you won’t be able to avoid taking on debt, and then you won’t be able to pay it down quickly afterwards. When you find yourself in this situation, consolidating and refinancing with a company like SoFi can be a good option.

Setting Medium Term Financial Goals

Once you have set a budget, which enables you to pay down debt and maintain your emergency fund at a level you feel comfortable with, then you’re ready to look at Medium-term goals. These could look something like:

Paying down any outstanding lower-interest debt
Putting savings to work in medium-term products, such as Certificates of Deposit (“CDs”), or a Brokerage Account for investing
Setting aside money for other life goals, such as buying a house, a car, or perhaps creating a business.

Setting Long-Term Financial Goals

Finally, we look to long-term goals. This ties back into your budget, set back in the short-term goals step, and perhaps some of your additional saving in medium-term goals:

Buy a house/car, take the trip of a lifetime or set up your own Company
- Depending on your income level and what you’re looking to spend, it may take you a while to build up the amount of money required to achieve one or all of these goals.
Retire at age ___ able to live for __ years on $__ per month.
- This requires a bit more thought – what sort of lifestyle do you want to live when you retire, how long do you think you’ll be retired for and how much do you need to save in order to hit that goal?

This can be a lot to figure out, so we recommend using this handy tool put together by NerdWallet to see where you stand. It will guide you through your current expectation for retiring, and allow you to adjust all of the parameters, to see where you stand based on changing assumptions over time.