How to Set Personal Financial Goals

Finances play an essential role in managing and maintaining your spending and structuring your lifestyle and living conditions. It is for this reason that you need to set goals regarding your financial security and freedom. Financial goal setting is necessary, whether conducted in the short-term or long-term. Financial goals also incorporate comprehensive strategies for tax reduction, retirement, risk management, and maintaining cash flow.

Periodic financial planning is essential in order to review your goals, update them, and review progress from the previous financial period. When setting financial goals, you should critically evaluate your financial abilities to ensure that they are realistic and achievable. Below are effective ways of financial planning;

Create a Budget

When it comes to creating a budget, the first step is identifying how much money you have access to. From that amount, deduct liabilities like debt to determine your net income. One of the crucial steps in creating a budget is finding out what you need, want, and value most, and managing your expense priorities.

To create an efficient budget system, you might want to integrate all your accounts into one and categorize them. This can also be achieved by going through your previous bills, expenses and financial statements and labeling them by categories. At this point, you should list how much you wish to spend on each category item and compare it with your allocated amount for spending. The money should be at the same level; otherwise, you should adjust your budget accordingly.

Build an Emergency Fund

Emergency funds are important in ensuring your financial stability in case of unforeseen circumstances like unemployment, and serious cash emergencies. The proper way to put together an emergency fund is by having an amount of money automatically deducted from your paycheck and having it deposited in a separate account, or by setting aside the amount during your budgeting process.

An emergency fund should be a priority item when setting financial goals. The amount for the fund should be between three to six times the amount of your living expenses; this helps guarantee cushioning during difficult economic times. Because of its nature in urgency, the fund should be easily and quickly accessible at all times.

Pay off Debt

The first step in securing a debt-free financial statement is identifying and keeping track of how much you owe. This may be in the form of credit card debt, student loans, bank loans, or other personal loans. There are different criteria and methods that can be applied to repaying your debt.

Some strategies to clearing your debt include; paying your debt, starting with the one with the highest interest. This is because costly interest rates make it difficult to achieve your financial goals. Another criterion, debt snowball, would be to pay off your debt from the lowest to highest regardless of the interest rate; this is meant to motivate you to clear the debt. Regardless of which method you prefer to utilize, the goal is to reduce your debt burden and maintain your creditworthiness.

Save for Retirement

Retirement is a critical stage that requires financial planning in advance. When developing retirement strategies, one of the important steps is to determine the cost of your living expenses during retirement. The next step involves subtracting your expected income and contributions to social security, retirement plans, and pension schemes. The value you remain with should be the deficit amount you would need for your retirement portfolio.

One strategy of planning for retirement is to apply for an employer-sponsored retirement plan, where the employer matches your contribution. Another approach is enrolling in an independent retirement arrangement and utilize tools provided by GBTI Bank and other financial institutions. Remember, when planning for retirement, you should adjust to accommodate for increased healthcare expenses.


Investing extra funds is a beneficial step towards achieving financial growth and stability. An investment can either be a short or long-term venture. Making investments can also be utilized as a tool for meeting other financial goals like retirement and maintaining emergency funds.

The key to securing a healthy investment portfolio is diversifying. You can, for instance, invest in stocks, real estate, and bonds simultaneously. For short term investments, consider investments with a debt nature like fixed deposits, debt mutual funds, and bonds, because there is less chance of losses. Earning additional income from investments fast tracks your financial growth and securing budget deficits.

When setting goals for your financial future, you should consider incorporating other aspects of your life into your financial plans. Strategies resulting from such input includes taking a life insurance plan and health and education policies.

The key to setting goals is planning, keeping consistency in your efforts, and updating them when necessary. Keep track of your finances using books of accounting and online tools and software. Researching the progress of your financial plans and alternative sources of income would further go a long way toward reaching financial security and freedom.