Setting financial goals

Having financial goals is an important part of being financially literate. Your financial goals can be short-term, midterm, or long-term – or, if you’re really savvy, you might even have a mix of all three. The idea of incorporating goals, especially depending on your debt and income situation, might seem really nerve wracking. But it doesn’t have to be. Let’s break it down into three steps.

Step 1: Set a goal (duh!)

The first step to goal setting is, unsurprisingly, setting a goal. You may have lots of things you would like to achieve, but if you’re new to goal setting, it might be easier to start with just one. There are many different finance goals you can have, but some of the more common goals are:

• Save for a big-ticket item like a car, home or holiday

• Build an emergency fund
• Pay off debts
• Create a sustainable financial routine
• Build good credit
• Make more money

No goal is better than another, so just think about what works for your personal circumstances. It’s common to feel pressure to spend your money in a certain way, but when was the last time you shut out external opinions and thought about what you really want? What would you like to change or achieve with your finances?

Once you have your goal, write it down and put it somewhere you will see it often, such as your phone, fridge or wallet.

Tip: It’s at this time that you should set a loose check-in date with yourself (think in 3, 6 or 12 months). Mark this date in your calendar and commit some time on that day to review how you’re tracking.

Step 2: Be brutally honest with yourself

The second step to financial goal setting is understanding your relationship with money and your current spending habits. A good way to do this is to record your spending for a short time (2 – 4 weeks) to get a good idea of your habits.

You may like some of your current habits, such as setting up automated transfers, shopping around for deals, or putting money aside every week and you may also notice some habits you’d like to change, think buying lunch instead of cooking at home, regularly using credit services like Afterpay and Zip Pay, or using your savings for impulsive or non-essential purchases.

You may also notice some spending leaks you want to reduce. For many people, spending leaks include:

• Food & beverages (dining out, take away, coffee, bevvies)
• Sneaky subscriptions (are you sure you cancelled that streaming service trial last year?)
• Impulse spending (did someone say retail therapy?)
• Paying bills after they are due so you get hit with late fees
• The 'top up shop' when you go to the supermarket outside of your regular planned shop

Step 3: Don’t overthink it, just start

Okay, so now you know your goal and which personal finance habits you want to change, now it’s time to take action. Most financial goals are about lots of small steps over a longer period, so don’t be nervous. Just take a deep breath… and then rip off the metaphorical band-aid.

There are number of ways to take action, and that will depend on your goal. This could look like:

• Setting up automated transfers to work towards your goal effortlessly
• Tracking your finances (using an App, spreadsheet or even on paper)

• Set a no-spending challenge to make it fun
• Change your account settings so you can’t access your savings account through Internet Banking or your Mobile Banking App (we can help with that!)
• Ask trusted friends or family to keep you accountable
• Find cheaper alternatives to things you normally spend big on (bring coffee from home, or a picnic in the park instead of an expensive lunch)
• Park some funds in a term deposit (6 months will fly by!) so you're earning more interest while you figure out a longer term plan
• Speak to a finance expert who understands your situation and can offer quality, personalized advice.

Before you know it, the check-in date you set right at the start will come around. On this day you should review your finances and see if you’re on track to meet your goal. If you’ve already achieved your goal, then congrats! That means it’s time to set a new goal.

Or, you might check back in with your finances and realise you want to change your goal or spend the money you’ve saved on something else instead. That’s totally fine, too! It’s your goal and it has to suit you.

Remember that no matter your goal, having some structure and strategy in your finances can reduce debt and spending leaks, and just generally give you a higher quality of life. What are your current financial goals? Let us know!  

Please note: this information is general in nature and does not take into account your personal circumstances or objectives. You should consider this before acting on any of the information contained.