How to Start Using Financial Goals to Improve your financial health

What is supposed to be the start of a fresh decade, the year 2020 is finally receding into the past. It certainly looked like a promising year the last time we set our new year’s resolution which is likely to include some financial goals.

Little did we know that the supposedly “wonderful” year eventually ended up making our every day seem nebulous and left us grinding our teeth at home for almost 80% of the year. 

While some people may remain unaffected or perhaps even thrive during the pandemic, there is no doubt COVID has burned a hole in the pockets of many others who struggled to cope with the unexpected change.  

If you are one of them who has a hole in your pocket, it’s time to start this new year 2021 salving those financial burns and improving your financial health by including some financial goals into your new year’s resolution and crushing them.

If you have never created financial goals and would like to know how to start creating them or if you already have some financial goals in mind but want some tips on crushing them, this post is for you. 

Financial goals are specific objectives or target aims of where you want your money to reach at a specific time period.  

To put it simply, ask yourself—what do you wish to do but you can’t right now because you don’t have enough money? 

It can be, for example, to have an emergency fund that covers 6 months of your expenses if you have no other sources of income at the time. 

But because you don’t have enough money to do that right now, you will plan and work towards achieving that goal of yours. 

Do Financial Goals Actually Work? 

A quick search tells me that having goals is no doubt one of the reasons for the success of million- and billionaires like Bill Gates, the famous Warren Buffett, and Daymond John, in which they still practice today. 

So, how does it work? 

Having a goal gives you a clear direction to work on a strategic plan that drives you towards reaching your goal. 

To change a dream or thought to achievements requires a transition. And that transition is a long process that requires consistent commitments. 

Maybe you wish you had $100,000 in your savings or you dream about becoming a millionaire. Merely having that wish or dream won’t change anything if you don’t actually make it your goal and work towards it.

Imagine being lost in the forest, most likely your main goal is to get out of the forest and head back home. Having that goal in mind, you will learn to survive, read the map, and make use of the compass to lead yourself back home. 

Otherwise, without a goal, you will just wander around the forest aimlessly and probably get stuck in there forever.

Of course, having a financial goal doesn’t mean you’ll achieve it for sure. When setting your financial goals, your goals must be clear, definite, and realistic.

If you have gone through personal finance books, blogs, or courses, you will most likely have come across the word “SMART” planning which stands for Specific, Measurable, Attainable, Realistic, Timely.   

Checklist Before Having Financial Goals

Before you start thinking and planning for other financial goals, you might want to get a few goals checked to help you build a strong foundation for your finance. 

Emergency Fund Aka Anti-murphy Fund

In personal finance, you will often see the term “emergency fund”. While I call it the anti-murphy fund, some also call it the “life happens” fund.

When you start taking hold of your own finances, Murphy will always try to make you cry.

Who’s Murphy, you ask?

He’s the one from Murphy’s Law which literally means “anything can go wrong will go wrong”. 

Whether it’s a sudden car or household repair, getting laid off or even losing your job or even a car ticket, it all involves money.

So to have an anti-murphy fund means to have a money cushion to help reduce the financial impact and risk of getting into unnecessary debts if Murphy comes knocking on your door.

Become Debt-Free

Debts are the ball and chain that lengthens your financial freedom, cause anxiety, and disrupt your financial status. So before you make other financial goals for yourself, it will be worth it to kick off the bad debts that steal your time and freedom. 

Invest In Your Future. 

Investing is different from saving for retirement. When you invest for your retirement, the money you have contributed works to gain more money for you even while you’re sleeping so you can have a better retirement life. 

One thing you definitely want to do is to contribute to your employee’s retirement fund (cause it’s free money so why not?). 

Investment works on compound interest. This means the earlier you invest the better. So take advantage of it by investing earlier—like now. 

Now, if you’ve got those basic goals checked, you’re ready to move on and start making goals for yourself. 

In other words, you’re ready to get on track and work towards financial freedom! 

How to set up your financial goals

If you already have in mind some of the goals you want to achieve, that’s great! If not, don’t worry. Here’s how to do it.

Basically, there are 3 types of goals: short-term goals, mid-term goals, and long-term goals.

Short-term Goals

Short-term goals are the objectives that are easy and quickly attainable within a short time period. Some may say 6-24 months or less than 12 months. But I like to keep it at within a year or 12 months. 

Examples of short term goals are:

  • Save up 20% of your net income every month for 12 months.
  • Pay off your $5000 debts within 12 months 
  • Save up $1000 in your emergency fund within the next 3 months. 
  • Save up money to start up a small business within the next 2 or 3 months. 

Mid-term Goals

Mid-term goals are more challenging but can act as a stepping stone to achieve your long-term goals. It ranges from anywhere between 2-5 years.

Examples of mid-term goals are:

Saving 30%,50%, or even 100% for a downpayment of a $XXXk home.

Pay off your debts completely and be debt-free within.

Having invested $100,000 in your retirement account. 

Long-term Goals

Long term goals are objectives that require much more planning and consistent efforts to reach. It is an important way to think about your future which could involve your family’s future as well. It will be a bumpy road with lots of hurdles and achieving it may take more than 5 years. 

Examples of long term goals are:

Paying off your mortgage

Saving for your child’s education

Buying your second home

Having a net worth of $500,000 or even becoming a millionaire in 10 years 

If you’re feeling confused about how to construct your financial goals, one easy way to get started is to ask yourself—what do I want to achieve:

  • In the next 3 months?
  • Next year?
  • In the next 5 years?

Don’t be afraid to start small and tweak the numbers if you want. You can have totally different goals for each of the short-, mid-, and long-term goals. For example:

  • Saving for my trip that’s going to be in 3 months
  • Start investing next year.
  • Owning my very first home in 5 years.

Or you can use your short-term goals as your stepping stone to achieving bigger goals. For example:

  • Have $1000 saved up in 3 months to buy a house.
  • Increasing your savings to $10,000 by next year.
  • Saved enough to buy a $XXXk house in 5 years. 

Tips For Achieving Your Financial Goals

Having goals or financial goals are great. But many times, the real challenges lie in actually sticking to it. Remember when I say the transition of turning a dream or thoughts into reality requires a transition that involves long-term commitment?

So, to make it easier to stick to your goals, here are some of the tips that hopefully, can be helpful to keep you going and crushing those goals. 

Incorporate SMART Planning Into Your Financial Goals

  • Specific 

Set a clear number of what you want to achieve. For example, saving $1000.

  • Measurable

How do you measure it? For example, by saving the money into a savings account that you call the “emergency fund”. With that, you will be able to track how much you have saved and if you are keeping on track.

  • Attainable 

How are you going to achieve it? Most often, it is through the income you get from your job. However, it can also be from other sources of income.

  • Realistic

Are you able to do it with your current situation? If not, is there anything you can do to change your current situation so that you can actually achieve it? 

  • Timely

How long are you giving yourself to achieve that goal? For example, have $1000 saved up in that emergency fund within 3 months. 

Get Inspired

I’ve always believed that willpower requires so much less effort when there’s motivation. While some said you need the willpower to succeed, I think more often than not, what one really needs is the right motivation which when present, will get you through without feeling so much like “work”. 

And to get the right motivation is to get inspired in the first place. Why do you want to do that? Why are you trying to achieve those goals? 

When you ask yourself and understand why you’re doing it, you won’t actually need that much “willpower” to do it. 

Remind Yourself Of Your Goals Every Day

One reason it is so challenging to stick to the financial goals is the lack of emotional engagement between you and your financial goals. In other words, your desire to achieve that goal did not reach the threshold to make a difference in your actions.

When you remind yourself of your goals every day, you’re building an emotional connection between yourself and your desires. And when your desire is resolute, you’ll be naturally working towards it. 

Focus On The Process, Not The Outcome

Many times, seeing the success of others makes it feel easy and we’re anxious to get to where there are while being blind to the stories behind their success. 

Know that there are many challenges and efforts behind every success. They may have a smile on their face when you see them in person or in pictures, but you will never know how sore they are from all they have done just to get to where they are. 

Always remember to focus on the process and never only on the outcome. 

Be Realistic With Your Goals.

There is nothing wrong with being ambitious and aiming high for your financial goals. But what you aim for will equal how much work you will need to put in. 

So you can be aggressive in setting your financial goals, but make sure it is realistic and attainable. 

For example, becoming a millionaire in 10 years solely based on your annual income of $30,000 is not realistic. However, if your financial goal is to become a millionaire in 10 years and you’re willing to find practical ways to increase your income streams, whether through investing or building your own company business, though challenging, it is a realistic and attainable financial goal. 

Final Thoughts

There may be times that you won’t be able to achieve your goals within the exact timeframe. 

But know that life happens and there are many things you couldn’t have controlled like the fluctuation of the economy or the coronavirus pandemic. 

Financial mistakes can also happen and it is definitely normal to get off track from your habits at times. Even great investors like Warren Buffett make mistakes. But what matters the most is to get back on track, learn from the mistakes and continue to move forward in the right direction again.

When there is a will, there is always a way. All you need is patience and dedication and you will get there eventually. 

So, have you thought about your financial goals? What will you do to achieve those goals?

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About Stephanie Jyet Quan Loo

Founder of, a science geek, sports freak, and polyglot. Loves food, books, and snow. Feel free to say hi! 

2 thoughts on “How to Start Using Financial Goals to Improve your financial health”

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