Making Investments in Your Future: How to Set and Achieve Financial Goals

Barbara Marquand | guest writer for GoTalkMoney

The beginning of the new year traditionally is the time to make resolutions, but when it comes to your finances, anytime can be a good time to take stock and set goals.

According to a Fidelity Investments survey, 43 percent of American adults resolve to improve their finances in 2010, up from 35 percent last year. Yet most people fail to keep their resolutions, and as many as a third lose their resolve within a month, says a FranklinCovey survey.

Don't let your resolve slip away in the next year. Here are 10 tips for setting and achieving your financial goals.

Investments Should Reflect Values

1. Create goals that reflect your values. Think about what's important to you. What do you want out of life long-term and in the next year? There's no use in setting goals that don't dovetail with your values.

2. Make sure your goals are achievable. It's good to stretch for new achievements, but you're likely to give up if the goals aren't reachable. Review your financial life and set goals that you know you can achieve if you work hard.

3. Be specific. Make your goals measurable. Instead of "save more money," set a specific dollar figure or percentage per week or month to save. Instead of "learn more about investing," set a goal for taking a personal finance course or reading one finance-related article per week.

4. Set short-term, medium-term, and long-term goals. Short-term goals might include saving for a summer vacation or paying down a high-interest credit card. A medium-term goal might be purchasing a car, and a long-term goal might be saving for a down payment on a house or saving toward a comfortable retirement.

When Will You Purchase a Certificate of Deposit?

5. Set time limits. If one of your goals is to pay down a credit card, by when do you want to have the credit card paid off? If you plan to save $1,000 for a certificate of deposit, when do you want to buy the CD?

6. Prioritize. Choose a few goals to focus on and make sure your short-term goals build toward your long-term goals.

7. Write down your goals. You're less likely to forget your goals if you write them down. Post them in a spot that you see frequently to reminder yourself of the direction you've set.

8. Plan how to reach your goals. Say you decide to save for a down payment on a new car. How will you do it? How much will you need to set aside, where will that money come from, and where will you deposit the money? In that case, you may want to open a separate savings account or money market account.

Boost Savings Rates: Make It Automatic

9. Make achievement automatic. The best way to achieve savings goals is to make savings automatic. Increase the percentage deducted from your paycheck into an employer-sponsored retirement plan to boost retirement savings. Ask your bank to automatically deduct money from your checking account to a savings or money market account each month. You won't miss the money as much if it's deducted before you have a chance to spend it.

10. Follow up. Schedule times to check your progress and adjust your goals. Many fail to reach their goals because of inflexibility or a lack of follow-through. Avoid all-or-nothing thinking. If it turns out after three months you can't afford to save 10 percent of every paycheck, then adjust the goal to, say, 5 percent.


National Endowment for Financial Education • Be Smart About Your Goals • http://www.smartaboutmoney.orghttp://www.smartaboutmoney.org/Home/TaketheFirstStep/SetFinancialGoals/tabid/404/Default.aspx
Etta Mae Westbrook • Setting and Achieving Financial Goals •  http://www.utextension.utk.edu/publications/pbfiles/pb1454.pdf
Vanguard Retirement Plans • How to Keep New Year's Resolutions • https://retirementplans.vanguard.com/VGApp/pe/pubnews/NewYearResolutions.jsf?SYND=RSS&Channel=yourmoney
National Foundation for Credit Counseling • CREDIT COUNSELING CEOs LIST TOP TEN NEW YEAR'S FINANCIAL RESOLUTIONS • http://www.nfcc.org/FinancialEducation/consumertips/FinancialResolutions.cfm
Selena Maranjian • How to Keep Your Resolve (and Get Richer) • http://www.fool.com/retirement/general/2009/12/28/how-to-keep-your-resolve-and-get-richer.aspx

Disclaimer:This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.

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