3 Top Mistakes to Avoid When Creating Financial Goals

At times, the world may seem shaky beneath your feet but a good way to plant yourself on solid ground is to pursue financial goals. The start of a new month or a new year is a great time to begin your pursuit of financial targets.

You may have already set a budget so your objective is to make good choices when it comes to money. 

Although the road may seem long, you can reach your desire by avoiding these mistakes when creating financial goals.

Don’t Set Too Many Goals

This might be a little counterintuitive to what you may think but too many financial goals may be a problem. 

It’s great to have goals in mind such as paying off a house, credit card bills, and student loans but if you try to take on all of them at once you may get overwhelmed. 

One of the main reasons individuals stop what they’re doing either halfway or even at the beginning is due to the overwhelming feeling that results from taking on too much.

To avoid these feelings, set no more than two or three goals. Work on them separately if you have to. You can always adjust your plans.

Use SMART Goals

When you create your goals use the SMART goal framework. SMART stands for

  • Specific
  • Measurable
  • Achievable
  • Realistic
  • Time-bound

By using SMART goals, you will be able to clearly identify your goal and how to approach it.

Focus on Small Goals

When you’ve defined your goal(s), create smaller goals or tasks. For example, something to strive on a weekly or biweekly basis.  

It sounds easier to complete one smaller goal after another than trying to climb a mountain. If you keep achieving short-term goals you’ll feel good and create momentum. 

Don’t Forget to Track Spending

If you pay your bills and wonder why you don’t have enough money, or you think, “where did all my money go?”, then there’s a problem. 

You should be able to track all of your income. This is where creating a budget would help.

Tracking your budget might give you some ideas on how you can improve your progress by shifting your spending or eliminating wasteful spending.

How Do I Track My Spending?

Working on your financial goals includes tracking your spending and there are many different ways to do so. 

You can write everything you’ve spent in a notebook, use a spreadsheet, or use a mobile app. Many online accounts for banks, credit unions, and credit cards help you classify your expenses into specific categories.

Aside from the essentials, such as gas, clothing, and utilities, don’t forget expenses like snacks purchased with cash or recurring expenses that might be automatically charged to a credit card, like exercise memberships or entertainment subscriptions.

Don’t Forget Other Important Funds

You might jump to the idea of putting every penny towards your goal, but avoid taking it to the extreme. 

A common mistake is neglecting savings for an emergency fund or investing in your future, whether it be stocks or mutual funds, or expanding your work skills. Of course, if you have debt, it’s probably a good idea to eliminate that as soon as possible.  

If you can afford it, you don’t want to deprive yourself of entertainment and make things miserable for yourself.  

The fewer mistakes you make the easier it’ll be to stay on track towards your financial goals. Start small and celebrate each milestone you can. Whether you’re looking to improve your financial situation or maintain your financial health, everyone would benefit from avoiding these mistakes.