Creating Strong Financial Goals (DRS #5)

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Today we’re going to be looking at how to develop strong financial goals.

Types of Goals

There are typically 3 groups of goals: Short-term, Mid-term, and Long-term. I break them like this:
Short-term goals can be completed in less than 2 years.
Mid-term goals will take somewhere between 2 & 4 years to complete.
Long-term goals will take 4 or more years to complete.

Creating Strong Financial Goals

Each goal type can be independent or can build on each other. Both approaches have their advantages, however I prefer building on each other. When I look at my overall financial goals, I like to determine my long-term goal and work backwards to develop smaller and smaller goals as I get closer to the present moment.

Working Backwards

I like to work backward from my long-term goals to create a cohesive from my short- & mid-term goals. I find working backwards allows me to create a more reasonable and realistic goal for the present. Previously, when I have created financial goals, I’ve made pretty realistic goals for the short-term but then I try to create bigger & less attainable goals.

For example, I would start with a goal of completing a 52 week challenge totaling $1,400, then try to save ten times as much the next year. And worse yet, I won’t have set plan to get me to my new goal. Because of my ambitious nature, I have to work backwards to find a consistent goal to work on over time. So instead of creating a crappy goal I’m bound to fail, I’ve transitioned to a SMART goal I can actually achieve.

Now you might not be like me, when is awesome! I had to learn how to create successful goals. I’m guilty of starting strong with good intentions, only to lose focus and fail within a month. I’m also guilty developing vague goals with no real focus. When I finally learned about SMART goals, and how much more successful I am when I work backwards, my goal-setting and goal-meeting began. I was finally able to follow-through with, and meet, my goals!


First, let’s recap how to create SMART goals. Whenever you set out to create goals, make sure it is:
Specific-the more specific your goal is, the more likely you are to accomplish it.
Measurable-If it’s not measurable, how will you know when you’re done?
Attainable-Are you committed to the goal enough to work on it continuously?
Realistic-Can you actually meet this goal, within reason?
Timely-Giving yourself a deadline helps you meet your goal (if you stick to it).


Personal Example: Be Debt Free

Let’s look at my current long-term goal, to be debt-free. When I first decided on this goal, I made it a personal goal and didn’t tell anyone about my goal. Not even my husband. When I started to stumble, I decided to talk to my husband about it to help keep me accountable. This made a pretty significant difference in how I approached the goal. I’ve also had to change my monthly contribution amount and create an additional goal to support keeping my goal on track for the time frame I’ve set.

If you’ve been following the Debt Repayment Series, you’ll know my current debt payoff date is actually December, 2039. With some changes, I’ll be able to speed this date up.

My mid-term goal is to have my debt down to $40,000 by January, 2018. This marks an approximate halfway point in the journey towards achieving my long-term goal of becoming debt-free. My total debt was originally over $80,000, so this is less than the original total.

My short-term goal is to pay an extra $7557.95 on my debt this year ($145.35 a week). I’m currently at $3184.25, which is about 42% of the way there. Given that there are still a couple weeks to the halfway point, this is about right. If you’ve looked at my savings challenge, you’ll notice I like having the same number every week instead of constantly changing numbers I never remember.

Developing Your Goals

Building Forward

Let’s start setting your financial goals. Take a minute to write down your goal for the coming year. Is it a savings goal? A repayment goal? Whatever it is, is it a SMART goal? Do you need to modify it to make it a SMART goal?

After you’ve decided on your 1 year goal, use it to create your 3 year goal. Is it 3 times your original goal? A different amount? What is the difference between your 1 year and 3 year goals?

Now use that goal to formulate your 5 year goal. How is this goal different from your first two goals? Is it a multiple of the 1 year goal or the 3 year goal? Is it achievable?

Now create your 10 year goal. How different is your 10 year goal from your 1 year goal? Is your 10 year goal still a SMART goal?

Finally, create your 15 year goal using your 10 year goal. Is this goal realistic? Are you motivated enough to continue to work on this goal for the coming years?

Now we’re going to look at developing goals in a different way.


Building Backwards

Take a minute to think about where you want your finances to be in 15 years. Do you want to pay cash for your child’s education? Be debt-free? Have rental properties? Retire? There is no wrong answer.

Take a minute to write down all of your collective goals. If you’ve written down more than one, select your most pressing goal. Take that goal and assess how SMART it is: do you have identified & realistic amounts, time frames, and motivation? If not, how can you modify your goal to make it SMART?

Let’s break it down into smaller steps. Let’s look at the 10 year mark. What does 2/3 of your goal look like? If you’re working with a total number, divide the total by 3, then multiply by 2 to get your goal amount.

5 years from now: What does the first 1/3 of your goal look like?

3 years from now: What does the first 20% of your goal look like?

Next year?

You should use the process that worked the best for you in developing strong goals.

Creating Goals Wrap-Up

  • There are 3 types of goals: short-term, mid-term, and long-term goals.
  • If you want strong and successful financial goals, it’s recommended to use the SMART method.
  • Build your financial goals together to make a cohesive plan from start to finish, by working backwards or forward, building your goals together.

What To Do When You Fail

When you are changing your behaviors, some level of failure or relapse is expected. Eventually, in some big or small way, you will fall of the wagon. That’s absolutely okay. You’ve still got this!

Failure is a stepping stone to improvement, and ultimately, success.

When you’re confronted with your own failure, you can do one of three things:

  1. You can give up.
  2. You can keep doing the same thing.
  3. You can make a change.


Which One Will You Chose?

If you give up, you’re just admitting that you failed and then trying to convince yourself that you never really wanted to work on that goal in the first place.
If you keep doing the same thing, you’re telling yourself you want to finish the goal you’re working on, BUT you either don’t want to be uncomfortable or you don’t want to work harder.
If you decide to make a change, you’re demonstrating a desire to accomplish your goal despite the possibility of having to be uncomfortable or working harder.
Which of these options will help you the most with accomplishing your goal? If you guessed #3, you’re absolutely right. But how do you figure out what needs to change?

What Needs to Change?

You may need to change your overall goal, the time frame of your goal, or your approach to meeting the goal.

If you need to change your entire goal, you may need to reflect on how to make the goal a SMART goal.

When I modify my goals, I typically start my changing my approach.

Personal Example

With my debt-free goal, I’ve had to make changes several times. When I first decided on this goal, I made it a personal goal and didn’t tell anyone about my goal. Not even my husband. When I started to stumble, I decided to talk to my husband about it to help keep me accountable. This made a pretty significant difference in how I approached the goal. I’ve also had to change my monthly contribution amount and create an additional goal to support keeping my goal on track for the time frame I’ve set.

Changing Time Frame

If you need to change the time frame, look at the overall specifics of your goal and determine how much additional time you will need to accomplish this goal? For example, if I needed to extend my goal by a year, that’s okay. This is still a realistic goal that can be accomplished. I recommend adding 6 months to a year at first if you’re changing the time frame of your goal.

Changing Entire Goal

If you find that your goal is simply unattainable the way that it currently stands, maybe it’s time to make a goal overhaul. You may need to change the overall specific value. For example, if you have a goal of saving $100,000 dollars in 5 years, but you only make $40,000 a year and you lose your job, you may need to change your goal.


  • Create SMART financial goals
  • Find a way to build your goals together into a complete plan of action.
  • Accept that you might not succeed immediately.
  • If you fail, find a different way to succeed.
  • Have an accountability partner to help you along the way.

Strong Financial Goals

What is your long-term financial goal?

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