Simple Steps to Setting Financial Goals - The Bossy House

Simple Steps to Setting Financial Goals

Set financial goals


Whether you have money left over every month or you're just scraping by, all of us need to set financial goals. These simple steps will help you make some choices so you can create a livable budget and a plan for meeting big goals your family has for your financial future. 

The cycle of credit card debt and end-of-month survival mode isn't your future. You can create a system that will ensure that you're meeting your goals, even if you don't feel like you have ANY money to spare right now!

How do I start? 

Getting started is the hardest part. Are you even ready to start? Take this quiz to find out if you are ready to put your financial systems up for scrutiny and begin the process of getting financial peace of mind. 

Because you're here, I know you are motivated and ready to make a budget that can help you move forward financially. Read on!

Before you set financial goals, take stock

The most important first step is to take stock of where you are with your finances. And getting honest is the critical step here so that you can, once and for all, look at your situation plainly. 

1. Add up your Savings

Use the pink sheets inside the Financial Planning Templates to list all the savings accounts you have and how much is in each.

Though I'm not that interested in tracking retirement savings as a savings account because that money should not be accessible to you, you SHOULD be saving for retirement. 

Financial planning sheets

If it's possible, you should be saving the maximum tax-free amount (which, if you're under 50, is $19k a year.)

2. Add up your debt

The second pink sheet is for listing your debt. 

This includes all credit card debt, your car note, and any other outstanding loans or invoices you have. 

Note down the minimum payment for each debt as well as the interest rate. (If you don't know the interest rate, NOW is the time to call up those credit cards and ask. You can also look on the statement-- they are required to tell you the interest.)

The biggest barrier to meeting your financial goals is debt. When you set financial goals, you want to consider how fast you can pay off your debt as a top priority. 

Assess your financial situation

It's time to assess your situation. Before you can set financial goals, you have to know where you are. 

3. determine if you're living beyond your means

The easiest way to determine your situation is to figure out: can you actually afford your lifestyle?

If you have ANY high interest credit card debt, you are living beyond your means.

Now, you might say that the rewards are worth it or you need to use a card for travel. I get it. But if you are carrying any debt from one month to the next and not paying it off in full, you are putting living expenses on the credit card. 

It's a trick that we fall for-- use a card for emergencies and then pay it off next month. But if we don't have an emergency savings plan, we won't have any month next month to pay it, just like we didn't have the money this month. 

The biggest barrier to meeting your financial goals is debt. 

There ARE reasons to go into debt: buying a car or a house are GOOD reasons to go into debt if you are smart about the interest rate and the financing. 

But credit card debt is a sign that either you are spending over your income or your budgeting is off. 

If you're putting vacations on the credit card, you are living beyond your means. 

If your child's tuition is on the credit card or, when it's due, it derails all of your financial plans to save money, you're living beyond your means. 

If the basics of life are going on the card, we have to change course. 

4. Determine how much Money you need to live

This is where you figure out exactly how much you need to live on each month.

Calculate your weekly cash expenses, your monthly bills, and your annual expenses (like tuition and taxes) using the blue and green sheets in the template set.

Financial Planning Templates from The Bossy House

Once you have your TRUE cost of living settled, you can start plugging in your income to see how much left over you actually have to spend on your financial goals. 

5. Cut costs

If you're not making enough money to afford your costs, you'll need to cut costs. Sorry. Has to be done. 

Go through all of your bills and see where you can cut. Do you need Hulu AND Netflix? Is that gym membership really work the $45 a month? Are you paying too much for car insurance, health care, or home owner's insurance? Now is the time to work to reduce the cost of your bills. 

And of course, you'll need to think about reducing your cash spending too. 

If you're planning to make a Down-to-Zero budget (and I think you should) you will create a system for putting money to goals FIRST before you leave yourself with a certain amount of cash for the month. This system helps reduce cash spending, and if you're living beyond your means, you NEED this system. 

Set Financial Goals

Without goals, a budget won't help you move forward to a life of financial freedom. Now that you've taken a good look at your situation and are poised to make some changes, you are ready to set financial goals. 

6. pick your priorities

If you have high-interest credit card debt, you need a serious plan to pay it off. That is first.

And if you don't have a savings account worth at least two months' of expenses, you need a plan for building your savings. That would be second.  

Third would be your retirement-- you MUST start saving. To find out how much you need to be saving every month for retirement, use this handy retirement calculator. 

Fourth, financial goals around large purchases (home, car) and paying for you or your children to go to college.

So take some notes about your situation-- what is the biggest goal you have between paying down debt, building a savings, and saving for retirement or college?

7. Make a plan

Based on your priorities and how much money you have left over each month to put towards your financial goals, you now can make a plan. 

First, let's all agree that we will NOT be using our high-interest credit card anymore for emergency purchases unless they are true emergencies. Not "wait until next week to buy tickets" emergencies, but actually not being able to buy groceries or fix a vehicle you need for work. 

And let's all agree that our situation is DIRE if we can't live within our means. If you are living beyond your means you will need to set some big goals about getting back into alignment. 

If you need to get your spending in line with your income, that should be your major goal. 

If you have debt, paying it down rapidly needs to be a financial goal. 

If you are all set on debt but don't have an emergency savings plan, that should be your goal. 

If you have no debt and a hefty savings, your dreams of buying a house or sending your daughter to college can be your goal. 

Determine one major short term and one major long term goal, and create secondary goals for each time period too.

Then fill out your monthly financial report based on your income, spending, and debt repayment and savings plan. Viola! You're off to the races! 

More Resources

You'll need more support as you create your monthly budget based on the financial goals you've set. See here for lots of help along the way. I'm cheering you on as you get free of financial worry and start meeting your goals! 

Get this set of financial planning templates to get started on your budget journey!

The Bossy House Financial Planning Templates