How to Set Smart Money Goals (and Reach Them)

Whether you’re living paycheck to paycheck or have found a way to keep some extra in the bank, most of us think about money on a day-to-day basis. Maybe you’re a rock star at saving, but your investments aren’t where they should be. Perhaps you haven’t been the best at paying down your credit card debt, or you think you should start a college fund for your child. Whatever the case may be, setting and sticking to money goals can be tricky, but we’ve got some advice to get started!

Determine your ultimate goal.

Building a healthy savings account? College fund for kids? Retirement? New car? Once you figure out your desired end result, breaking the steps up into smaller, more frequent milestones can help you stay on track and boost morale.

Track your income vs. spending first.

Use a spreadsheet, mobile app, or good old-fashioned pen and paper to determine where your money goes when you get it for one month. Mandatory bills like mortgage/rent, utilities, and loan payments should be deducted first, and then log anything you buy from groceries to Netflix. Then, the next month, decide on one bad habit to break. It might be your cringe-worthy Amazon habit or your daily $5 latte. Take that money and apply it to your goal! Do the same every month until you’ve got a good handle on your wants vs. needs.

Plan for the unexpected.

Many people consider a rainy day fund essential for a reason. Furnaces break in the dead of winter. A car crash leaves you without a way to work. Split your savings between “discretionary spending” and “total emergency” and challenge yourself not to touch the emergency fund unless you really have no other option.

Focus on eliminating as much debt as possible.

Saving money doesn’t mean much if you’ve got crushing credit card debt or enormous student loans. The sooner you pay off interest-bearing debt, the sooner you can focus on growing your savings and investments to meet other goals. Pick one loan or credit card at a time to focus on, and pay over the minimum payment on everything else. Reward yourself with something (budget-friendly!) each time you pay off a significant chunk of debt. If you’re super good, you might try to tackle an auto loan or your mortgage!

Overhauling your finances is tough, make no mistake. But taking small steps to change your attitude toward money can make a big difference when it comes to reaching your goals!

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