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What are financial goals? 6 tips on how to stash your cash

August 1, 2022 - 19 min read


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What are financial goals? 

Why are financial goals important?

The types of financial goals

What is an example of a financial goal?

How to set (and achieve) financial goals

Rounding out your life plan

If you’re asking, “what are financial goals?” you’re not alone. In fact, most people hate talking about money, so not knowing where to begin with financial goals is normal.

According to a survey conducted by Ally Bank, about 70% of Americans of all ages are uncomfortable talking about their finances. Those surveyed thought it was “rude or inappropriate to discuss personal money matters in a social setting.” 

Fidelity Investments conducted a similar study, looking at how couples handle and discuss finances. They found that only 61% of couples surveyed discuss their finances together monthly. That means 39% of couples rarely, if ever, actually talk about money. 

There are endless reasons why this social taboo exists. Perhaps you want to protect your social status, you’re afraid of judgment, or you were raised to avoid talking about it.

Whatever the reason, we all have the right to not share info about our financial situations. 

But silence can become problematic when it turns into financial anxiety — a condition that can lead to overspending, fear of spending, or even an increased risk of depression.

Financial goals are a healthier way to think and talk about finances. By intentionally looking at your money and making a plan, you can find peace. You might even improve your well-being as you get this area of your life in order. 

That said, what are financial goals, and how can you reach them? Finding answers to these questions will help you build a healthier relationship with money. Let’s get started.

What are financial goals? 

Setting personal finance goals means identifying the amount of money you need for the life you want. Then, you make a plan to acquire that sum of money.

A financial goal could be saving to buy a house or aiming to have a certain amount in the bank by the time you retire. You could be hoping to grow your emergency fund, save for college tuition, or pay off debt. 

This kind of future-oriented thinking might seem scary. According to one survey, 49% of Americans say that planning for the future feels impossible. And only 30% of American households have a long-term financial plan. Plus, 20% of Americans don’t or can’t afford to save any of their income.

But you should try to make a plan, regardless of uncertainty about the future. Even if you must make adjustments later, it’s essential for your mental and financial wellness.

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Why are financial goals important?

Financial goals will help you develop a healthier relationship with money. This, in turn, will help you prioritize your spending to build the life you want.


Your demographic will impact your financial situation, which is why it’s important to start saving early. For example, women face more difficulty saving, with 40% of women having only $100 or less in their savings accounts, compared to 26% of men with the same amount. Account balances are also disproportionately low for non-white households.

Your age can make an impact, too. A 2017 survey found that only 24% of millennials show signs of basic financial literacy, despite 69% thinking they had a lot of financial knowledge. 

Luckily, you’re here reading this article, so you’ll learn how to get ahead of the financial curve. Knowing how to set financial goals can help you in many areas, including:

    • Gives you a sense of financial security. Using money to pursue your goals will increase your confidence. You’ll know you’re spending on things that are important to you. If you make a plan, it can also help you improve your credit score.
    • Supporting your emotional wellbeing. When you spend on things aligned with your personal values, you will feel a sense of satisfaction with your life. This is especially true after you’ve made some progress toward your goals.
    • Lowering your stress. Because you’re being mindful, you’ll feel better about your financial decisions. There will be no more surprise bills to stress you out.
    • Giving you career flexibility. It’s easier to take risks and pursue your work goals when you have financial freedom. If you’re considering a career change, you’ll have a foundation for it, even later in life.
    • Insulating you against uncertainty. You can pay down debt, build an emergency fund, and set yourself up for retirement, which will protect you during uncertain times. This will help give you and the other 49% of uncertain Americans some security.
    • Helping you make a budget. Setting goals will determine how you plan your day-to-day spending. Your budget should be structured to help you reach your ambitions. It should also leave room to keep you thriving in the meantime.

The types of financial goals

You can break down your financial goals into three categories:

  • Short-term financial goals: Small financial targets can be reached within a year. For example, saving for a big-ticket item like a new television, a laptop, or a vacation is likely attainable within 12 months.
  • Medium-term money goals: These targets can take up to five years to hit. This includes significant investments like paying off your credit card debt or saving up for a car.
  • Long-term financial goals: These goals will take more than five years, such as saving for retirement or a new home.

Medium and long-term goals will require multiple steps to achieve. It’s important to break them down into milestones to track your progress over time. Short-term goals can also benefit from this strategy, but it’s not always necessary. That depends on what motivates you.

How do you define financial goals? The answer will be different for everyone. If you need help prioritizing your spending, try working with BetterUp. Together we can find out what matters most to you.

What is an example of a financial goal?

The best financial goals are tailored to you and your current financial situation. To help you start thinking about your own, here are some examples of what financial goals are.

1. Paying off student loan debt

Many people incur debt to pay for their college education. It can take years to pay it off. It’s understandable to prioritize this goal to avoid the cumulative cost of interest rate payments.

This is often the first step toward achieving debt-free status and financial independence. Make sure you know your interest rates and how long you expect to be paying them off.

After mortgages, student loan debt is the second-highest category of debt in America.

2. Creating a retirement plan

Depending on your life stage, retirement might seem far off. But if you start your retirement saving now, it’ll pay off in the long run. Many financial products can help you save, like a 401k or Roth IRA. 

Consult a financial advisor to determine your ideal investment strategy. A retirement plan is an excellent example of a long-term goal broken down into smaller goals. You can start by aiming to save 5% of your income this year, 6% next year, and so on. Eventually, you’ll hit your retirement target.

3. Buying a home

Buying a home is a common long-term goal. Real estate is a massive and highly sought-after investment. People usually aim for a down payment on a new home or seek to make bigger payments on their current mortgage. 

Consider how your current rent would compare to mortgage payments, what size of home you’d want to buy, and how much your down payment would be.

Remember, buying a condo in a city center always carries different costs than a farmhouse in a rural community.


4. Paying off a car

Car financing is more common now than ever. While it’s nice to have a reliable vehicle, bi-weekly or monthly payments can suck money out of your account. Many people try to pay off their cars quickly to use that money for other things.

5. Building an emergency fund

This one is less of a suggestion and more of a necessity. If you don’t have an emergency fund, create one as soon as possible. You should be able to live off of your savings account for at least three months if you lose your job.

It’s also worth creating a fund for other potential emergencies, like your car breaking down or your home needing repairs. You never know when you’ll need to break the piggy bank.

6. Saving for vacation

Vacations are important for your mental health and wellbeing, but they can be expensive. That’s why they’re a popular savings goal. You can save a little bit each month. Before you know it, you’ll be able to take the time off and go on an amazing adventure.

How to set (and achieve) financial goals

You should aim for financial targets that reflect what you value and what you want in life. Then you can create systems that will keep you motivated and accountable.


Here are some ways you can do that:

  1. Visualize the life you want. What are your personal goals? What about professional goals? Picture your ideal life, figure out what steps you need to get there, then work out how your finances support that journey. Writing a personal vision statement will help you stay on track.
  2. Break your larger goals into smaller ones. Each small goal should build on the last, inching you closer to your final destination. For example, if you’re saving up for a down payment on a house (a long-term goal), you may want to pay off your student debt first (a medium-term goal). Breaking this down into saving a certain amount each month (a small-term goal) will set you up for success.
  3. Prioritize. What’s most pressing to you right now? If you don’t have an emergency fund, that might have to be your priority. Then you can work on your debt and start saving for larger goals. If you need a new stove, you might need to forego added saving for a month. 
  4. Make them specific. It’s tempting to say, “I want to be financially secure.” But what does that look like? Put a number on it. This will help you measure your progress down the road.
  5. Make sure they’re your goals. Remember that your financial goals are unique to you — there’s no use comparing yourself to others. Make sure you’re chasing your dreams and not someone else’s.
  6. Budget, budget, budget. Layout your monthly expenses, including what you need to meet your financial goals. Then allocate portions of your income to each item.

Achieving your financial goals

The next challenge is sticking to your goals. Here are some tips to keep you on task:

    1. Give your goals exciting names. Instead of “saving for a house,” say you’re “getting ready for MTV Cribs.” Rather than “paying down debt,” you’re “getting the loan sharks off your back.” This is a fun way to keep you motivated when you would rather spend on something else.
    2. Set deadlines. This is a key tenet of setting SMART goals. Give yourself a clear time frame to achieve your financial goals. Otherwise, you’ll never make it a priority.
    3. Create a visual representation of your goal. Implement a tracking system and hang it somewhere visible if you're paying down debt. Some people tape a paper “thermometer” and color it in as they progress. Others use a sticker system. Find what works for you. Another great strategy is creating a vision board. Hang it somewhere you’ll see it daily to remember what you’re working toward.
    4. Add fun things to your budget. It’s one thing to reduce all your expenses to pursue your goals. But, if it forces you to sacrifice everything that brings you joy, your well-being could suffer. Try to factor in one thing that’s fun — even if it’s small. You’re more likely to stick to your goals if it’s not all suffering.
    5. Automate your savings. Your bank probably has the option to automate transfers between accounts. If you automate the saving process, you can reach your goal with minimal effort.


Rounding out your life plan

Your financial goals should complement your other ambitions. You should also be thinking about your:

  • Personal goals
  • Relationship goals
  • Career goals
  • Work goals
  • Fitness goals
  • Personal development goals
  • Spiritual goals

Setting and achieving goals in each area of your life will help you improve your whole self. Let BetterUp help you along the way. With the right support, you can set achievable goals tailored to your lifestyle.

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Published August 1, 2022

Elizabeth Perry

Content Marketing Manager, ACC

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