Ready to take control of your finances and start kicking goals?
Whether you want to pay off a lingering credit card debt, jet off on an overseas adventure, or make strides towards that house deposit, having a solid plan in place is the key to steering your finances in the right direction.
Here’s what you need to do to map out your financial goals – and stick to them.
How to set financial goals
Write it down!
It might sound like Financial Goal Setting 101, but here’s the secret to success: Write. It. Down. Grab a spreadsheet, fire up your Notes app – whatever works for you, just get those goals out of your head and onto something tangible. When you see it in black and white, you’re more likely to hold yourself accountable.
Plant reminders of your goals on your desk, fridge, or bathroom mirror. Pick a spot where they’ll be a regular reminder for staying on track.
Be SMART about it
We’re not talking about book smarts, we’re talking about setting goals that make sense. One effective strategy is to adopt SMART goals – meaning they are Smart, Measurable, Achievable, Realistic and Time-bound. Parameters like this help break down your goals into manageable parts, and allows for easier progress tracking.
- Specific: What exactly do you want to achieve with your money?
- Measurable: What does progress look like? Put a number on it so you can assess whether you’re on the right track.
- Achievable: What’s the game plan to turn that goal into a reality?
- Realistic: Can you actually pull this off? Keep it within the realm of feasibility.
- Time-bound: Tick-tock! What’s the deadline for your financial goal?
Let’s take a look at some examples.
Sarah wants to save for a holiday. Here are her SMART goals:
- Specific: “I want to go on a two-week adventure to explore the cultural wonders of Japan with my best friend in December 2024.”
- Measurable: “I plan to spend 14 days and 13 nights in Japan. I want to limit my expenses to $2,500 for flights, $2000 for accommodation, and an overall budget of $6000, which includes transport, meals, and activities.”
- Achievable: “To afford this trip, I need to save $6,000 in the next 12 months (~$500/month). I’ll achieve this by setting up an automatic monthly transfer to a dedicated travel fund, explore some side gigs for extra income, and cut back on discretionary spending.
- Realistic: “While dreaming of luxurious accommodations is tempting, I’ll balance my desire for comfort with the need to explore and experience the culture, ensuring my budget is well-distributed for an enriching travel experience.”
- Time-bound: “I am to have $3,500 saved by July 2024 to book my flights and secure accommodations early, taking advantage of any promotions. By December 2024, I’ll have the full $6,000 saved, allowing me to enjoy my Japanese adventure without financial stress.”
Sarah’s SMART goals provide her with a clear plan, ensuring she can enjoy her dream vacation without compromising her financial stability. Be like Sarah.
Ben is determined to save up for a house deposit. Let’s outline his SMART goals:
- Specific: “I aim to purchase a townhouse in the suburbs with a spacious backyard and three bedrooms by the end of 2026.”
- Measurable: “The house should have a minimum of three bedrooms, and my budget is set at $450,000. To achieve this, I plan to save $70,000 for the down payment, allocating $10,000 for closing costs and maintaining a contingency fund of $5000.”
- Achievable: “In order to afford this property, I need to save $85,000 over the next three years (~$2,361/month). I will achieve this by contributing a fixed amount to my dedicated house fund each month, exploring additional income sources, and making mindful cuts to unnecessary expenses.”
- Realistic: “While I aspire to own my dream home, I will remain practical in my choices, considering factors like location and maintenance costs. This ensures a balanced approach that aligns with my financial capacity.”
- Time-bound: “By January 2026, I aim to have $50,000 saved, allowing me to initiate the home-buying process. By December 2026, I’ll have the full $85,000, positioning me to secure a suitable home within my budget.
Ben’s SMART goals provide him with a structured plan, guiding him toward his home ownership dream without compromising his financial stability. Be like Ben.
Divide your savings across your goals
Now that you know how much you’ll need, it’s time to start setting aside money towards your goals. When payday rolls around, tackle your bills first (gotta keep the lights on, right?) – but after that, send a fixed amount straight into a dedicated savings account.
You might also consider setting up different accounts for each goal. That way, your travel fund won’t accidentally fund your midnight snack cravings.
Want to give your savings an extra nudge? Choose an account that rewards you for saving money, like our Bonus Saver account, which offers bonus interest for the first four months, or our iSaver account, which pays a higher rate of interest the more you save.
For an added layer of financial discipline, consider placing your funds in a term deposit. This is a secure and reliable option that offers a consistent path to building your savings, by locking away your money for a period of time that you choose. The longer the term, the more interest you’ll earn, and the closer you’ll be to achieving your goals.
How to stay on course
Alright, so you’ve established your SMART goals and you’ve got a plan in place to achieve them. Now the challenge is to maintain your momentum. Life can often derail the best-laid plans, so here are some tips to keep your financial goals firmly on track.
Set a realistic budget
Creating a realistic budget is one of the best things you can do to support your financial goals. A budget can help you see where your money is actually going, and identify the areas where a few adjustments can free up more savings.
Introducing a bit of flexibility into your budget will also increase the likelihood of achieving your goals. While the urge to splurge doesn't qualify as an emergency, realism is the key here. After all, goal setting is not just about setting aside funds, it’s about aligning your spending with your aspirations.
For those new to budgeting, check out our online budget planner calculator and Your Financial Wellness, which can give you personalised tips on how to maximise your budget.
Anticipate setbacks
Setbacks are a part of life, so embrace them. Rather than getting disheartened about any roadblocks that could impede your plans, be proactive about how to get around them, and be ready to adjust your timeline if needed.
Your pre-emptive strategy might involve building an emergency fund to handle unforeseen costs – think car breakdowns, rent increases, or unexpected events like pet emergencies or root canals. Once this safety net is in place, shift your focus back towards saving for your SMART goals.
Make it easy!
Managing money can be a mental juggling act, and the best way to ease that load is to make technology your friend.
Many banking apps have features that help you budget, set goals, and set up recurring transfers – and by adopting a set-and-forget approach you’re much more likely to succeed. You can use the BCU iBank and BCU Bank App to help stay on top of your finances. Managing accounts across multiple financial institutions? Not a problem, mymo by BCU can give you a full picture of your finances all in one place. Did we mention it categorises your spending too?
But take note: set-and-forget doesn’t mean drifting into autopilot! Make sure you regularly review your budget and track your progress, allowing room for adjustments if needed.
So go on, think about where you would like to be financially in a month, a year, or a decade from now. The power to take charge lies in your hands – and your habits.
Set your sights on SMART goals, keep these tips in mind, and you’ll find yourself on the path to your dream holiday or your dream house in no time at all.