Setting financial goals

Saving can be hard. One thing that is proven to make it easier is allocating your savings to specific financial goals. Here we cover what your financial goals might look like and what you can do to reach your targets in 2023 and beyond.

What is a financial goal?

A financial goal is simply a plan you make for your money. Each day, week, or month, you allocate money towards achieving your goal. You goal might include saving for some of the following reasons: 

• to buy a specific item, such as a bike, laptop or even a car 
• paying for your wedding 
• a deposit for a house or flat 
• starting a family 
• your kid’s uni fund 
• to get out of debt 
• for a holiday 
• to pay off your mortgage early 
• for retirement 

Why set financial goals?

A financial goal can be useful in helping you to change your spending behaviour. Let’s say, for example, you would like at some point down the line to buy your own home. When it's just a hope for the future, you might not necessarily be motivated to take steps to make it happen. However, once you make it a financial goal, you're much more likely to think about what you need to do to achieve that goal. You'll start to think about where you can make savings elsewhere, e.g. could the money you spend on takeaway coffee each morning be going towards the deposit on a flat.

What else could you be doing with your money?

If we continue with the coffee analogy, if you were to give up those coffees in the morning and maybe a takeaway at the weekend, would it be possible to save yourself an extra £25 per week? Let's take a look at what you could do with that money:

• over 5 years – you’d save £6,500
• over 15 years – you'd save £19,500
• over 30 years – you'd save £39,000

And these figures don’t take into consideration the interest you could earn on your savings. 

How to set financial goals

Write them down – by writing down your goals, it brings them to life. Pin them on your drawing board, write them in your diary, and regularly remind yourself of your goals. It will help you focus on making sound financial decisions throughout the weeks and months. 

Make them realistic – there’s no point in making goals you can’t reach. All that will happen is when you miss your target you’ll become disheartened and stop working towards your goals. Before you make any plans, have a look at your income and expenditure and decide upon a realistic target. 

Break them down – if you’re making long-term goals such as a retirement plan, break them down. If you have a specific amount you want to save over 15 years, break it down into a monthly amount. It will keep you motivated and make it easier to keep a track of your progress. 

Create savings accounts – one useful step towards hitting your financial goals is to open a savings account for each goal.  This way, you can clearly see how much you've set aside for each target. Being able to monitor your progress like this can be motivational and will also mean you benefit from any interest that is paid.