How to Make More Realistic Financial Goals in 2022

Table of Contents

Setting financial goals can be a monumental task if you’ve never done it before.

I mean, you’re setting financial goals for your life and where you’d like to be in the future with your finances. It can even be a little bit scary thinking years down the road. But you’ve gotta’ do it. You have to set personal financial goals and start shooting for them.

The financial goals you set for yourself are SO important. And in this post, I’m going to explain why. We’ll also talk about:

What personal financial goals are exactly
The reasons why financial goals are so important
The 3 types of personal financial goals
How to set financial goals for yourself in only 7 steps and…
7 tips to achieve all of your personal financial goals

So, first and foremost, what are personal financial goals?

What are personal financial goals?

Personal financial goals, or personal financial achievements, are goals that you wish to shoot for and complete over a certain period of time. These goals are certain accomplishments that positively impact your finances, help you become more financially stable or financially independent, and give you a huge sense of pride when you reach that goal.

Financial goals help you get a head in life, buy things you want, and point you in a positive direction. They bring you joy, positivity, and happiness. Financial goals can let you complete the wealth-building mission or whatever you’re shouting for. Need I say more? Here are a couple more reasons why you need to set personal financial goals.

Why you need to set financial goals

What are you working toward?

There are a few reasons why you should set goals. But a HUGE reason is because you’ve got to have something to work toward while you’re making money. You work too dang hard to just pay bills, eat, sleep, and spend money. You need to have dreams, goals, and a retirement plan. You HAVE TO have some financial goals so that you’re not just doing all of this for nothing.

Building wealth can be difficult

You want to set goals because building wealth can be very difficult without them. If you don’t have goals, you’re not really shooting for anything. So that usually means you’re wasting money and not putting effort toward any goals that you might have.

Goals put you on track

Having goals usually forces you to start managing your finances more closely. Why? Because if you don’t start managing your finances, you’ll NEVER hit those financial goals. I promise you. You’ll simply make money and spend money with nothing to show for it.

goals can be fun

I’m a person who likes to be challenged. So I love having goals. They make me think hard and get creative to achieve them. They hold me accountable and they make me understand what steps I have to take to hit each goal.

If you’re single, look at your goals as a challenge and find fun ways to hit each one. If you’re married, goals can be a great way to bond and dream together about what both of you wish to achieve as a couple. My wife and I have several goals that were working toward and hope to achieve one day. And I love that we have that.

The four types of financial goals

Short-term goals

Short-term goals are just that: goals that are meant to be achieved in a short period of time and are usually not all too difficult to complete. However, the longer they take, the more difficult they can be.

These goals can be achieved in a day, a week, a month or up to about 36 months (3 years). I still personally consider that short-term.

Common short term goals:

“I want to complete a 30-day no-spend challenge.”
“I want to make an extra $500 dollars in side hustle income this month.”
“I’d like to increase my total income from $90,000 dollars to $100,000 dollars this year.”
“I want to build my fully funded 3-6 month emergency fund in the next 6 months.”
“I want to pay off all consumer debt in the next 24 months.”

My personal short-term goals:

“I’d like to successfully complete a 30-day no-spend challenge this year in July without spending ANY extra money.”
“Pay an extra mortgage payment every single month this year without missing a single extra payment.”
“Make $4,000 dollars in any one month this year from my side hustle blog business.”

Medium-term goals

Medium-term goals are a bit longer long the short-term goals but aren’t as long as long-term goals. These are your goals that you’ll finish in more than 3 years but less than 10 years. I’ve got a couple of these and they’ve been a grind up to this point.

Common medium-term goals:

“I want to get my massive amount of consumer debt paid off in 48 months.”
“I want to go to my 4-year college completely debt free and without any loans”
“I want to have a $100,000 dollar net worth by 30 (5 years from now)”

My personal medium-term goals:

“I want to pay off my home in 5 years from August 2021.”
“I want to have a $500,000 dollar net worth by 35 years old (currently at $300,000 dollars at 30).”
“I want to achieve an income of around $10,000 dollars a month from my side hustle blog business by 35 years old (5 years).”
“I want to achieve a total annual income of $200,000 by $35 years old (5 years).”

Long-term goals

Long-term goals take a LONG time to achieve. These goals are normally pretty difficult to achieve just because of the length of time to complete them and the patience and discipline you have to have to keep working toward them. These goals are your 10 year plus goals. They’re more than 10 years and can be for your entire lifetime if you choose.

Common long-term goals:

“I want to pay off my home in 15 years.”
“I want to be a millionaire by the time I retire in 20 years.”
“I would like to purchase a rental or beach house for retirement in cash in the next 10 years after I pay off my home.”

My personal long-term goals:

“I want my wife and I to be millionaires by 45 years old (I’d like to shoot for 40 years old) – 15 years from June 2022”
“I want to help my son go to college completely debt free with no loans.”
“My wife and I both want to retire with dignity by 53 years old.”
“Have a fully funded bridge investment account to help with expenses between age 53 and 59 1/2.”

Legacy goals

Financial legacy goals are those in which you wish to achieve upon changing your family tree or leaving a legacy behind after you pass away. Most people don’t think about these kind of goals because they may be too far away to think about or because most people don’t plan goals for after their death. But these can be the most fun if you’re willing to sacrifice so that you can build wealth.

Common legacy goals (also my personal legacy goals):

“Leave my child an inheritance of at least a million dollars.”
“Help my child build a million dollar net worth by 30 years old.”
“Create college funds for grandchildren or great-grandchildren to continue changing the family legacy.”
“Create a perpetual debt-free college scholarship that pays out one single $2,000 dollar scholarship every year for the next 50-100 years.”

Have fun with the legacy goals. Yes, you may not be here anymore. But you can change the legacy of your entire family tree with just a little bit of proper money management. Do as Proverbs 13:22 says: “A good man leaves an inheritance to his children’s children.”

The key to setting goals: 7 steps to success

Step 1 – Start thinking

Before you set any goals, start thinking about YOU. What do you want in your life? Are you looking to simply fix your finances? Or do you have bigger financial goals like possibly becoming a millionaire one day?

This is the time to think deeply and start dreaming about the future. There aren’t a lot of normal financial goals that you can’t achieve over the course of your lifetime. So get creative and think hard. I want you to think of 3 financial goals for each goal category – short-term, medium-term, long-term, and legacy goals.

I highly recommend spending a decent amount of time over the course of a few days thinking about these goals because you will spend a lot of time and effort working toward them. They’re extremely important so don’t short yourself and write out goals that you don’t want or that won’t get you anywhere in life. Have fun with your goals.

Step 2 – Write them down

So this step is very easy and you may have already done it. All I want you to do is write out all of your goals for all 4 goal categories. You’re doing this so that you can see your goals in front of you and have them written down so that you don’t forget them. This will also continually remind of what your goals are. So get them all written down and move on to the next step.

Step 3 – Make sure they’re actually realistic

This step is incredibly simple. Your goals need to be realistic in a way that they are not completely ridiculous or unachievable. For most goals, if you’ve got the time, patience, and effort, you can achieve almost anything.

But if you’re making $30,000 dollars a year, and your goal is to be a millionaire in the next 12 months, that’s not realistic. If your goal was to become a millionaire over the course of your life, that’s more realistic (even on 30,000 dollars per year).

Step 4 – S.M.A.R.T. goals

The next you need to do is make sure all of your goals are S.M.A.R.T. goals. Making sure all of your goals got within this range of characteristics is key for achieving them.

Let’s use this example: “I want to be a millionaire”

Specific

The more specific your goals are, the more effective they’re going to be. You need to narrow down your goal and try to make it as specific as possible. So our example, “I want to be a millionaire,” is a good goal but you need to try and make that more specific.

Our new specific goal would be: “I want to have a total net worth of 1 million dollars by the time I’m 45, in approximately 15 years, with a paid off home, retirement accounts, and all other owned assets making me a millionaire.” Now that’s specific.

Be specific with your goals!

Measurable

Your goal has to be measurable. This means you need to be able to prove that you’re making progress toward them. With our original example, “I want to be a millionaire,” it’s measurable but your more specific goal of, “ I want to be a millionaire by 45 (in 15 years),” is VERY measurable. It’s measurable because it sets a date to finish the goal. It also lets you measure your progress every year with your net worth.

Attainable

You need to make sure that you can reasonably accomplish your goal within a certain timeframe. The goal has to be attainable in that period of time. If your goal was, “I want to be a millionaire in 1 year,” that’s not very attainable. But, “I want to be a millionaire in 15 years,” is very attainable for me when I already have a $300,000 dollar net worth.

On the flip side of this, If you’re starting with $0 dollars, or with a lot of debt, 15 years might not work. You may have to have a longer goal of like 20 or 25 years. But whatever you think can be reasonably attainable, go for it!

Make sure you can achieve your goals are attainable!

Relevant

Next up, how relevant is your goal to compare to your values and long-term plans? If you’d like to be a millionaire, but you’re constantly borrowing money and you don’t manage your finances, that’s not relevant to your values.

My values include being a finance nerd, hating debt, being frugal, managing our finances like a hawk, and being diligent about paying off our house and investing. Those values align perfectly with our goal of wanting to be millionaires by 45 years old.

Time-based

The last part of smart goal setting is to set a realistic, but ambitious, end date for whatever goal you’ve chosen to go after. In our millionaires example, I’ve set the goal of 15 years for us to become net worth millionaires. We set that goal because it’s realistic and somewhat ambitious.

A very ambitious date would be 10 years from now, at age 40, but we also want to have some fun in our lives. So we’ll stay intentional with our money while spending and taking vacations, but we’ll continue working toward net worth millionaire status.

Step 5 – Action plan

Next up is step 5: creating an action plan to start working toward your goals. There are a couple of quick things that you need to do.

Set a timeline

I want you to set a timeline for your goals. Think about where you’d like to be every so often along the way. As for our millionaire goal, We’re aiming to increase our net worth at least $50,000 dollars per year (whether it’s home equity, investments, pension money, or any other assets).

Small goals to hit along the way

Another way to take action is to set smaller goals along the way (or bigger goals that contribute to your other goals). For example, we’re trying to get our home paid off and we’re aiming to add $50,000 dollars to our net worth every year. That will help us continue our journey to millionaire status.

List of things that you need to do to hit your goal

One other thing you can do for your action plan is to write a list of 5-10 things that you can do to work towards your goals. The more things you can think of for that list, the better chance you might have to achieve your goal. Because every single little step toward your goal gets you just a little bit closer to it.

Step 6 – Start working toward your goals

Just start. Take action on your goal or goals right now. Create your goal and start your journey toward that goal RIGHT NOW. If you want to be a millionaire, start working on fixing your finances so that you can work toward that goal. If you want to get out of debt, start paying on your debts, pay extra on the smallest debt, or start working more to make more money toward being debt free.

Napoleon Hill said it best: “It’s a sure thing that you’ll not finish if you don’t start.”

Step 7 – Re-evaluate and track your progress

The last step in achieving your financial goals is to re-evaluate all of your goals every so often and make sure you’re tracking your progress.

Re-evaluate your goals

Re-evaluate your goals every so often to make sure you’re still on track and if you still wish to keep aiming for that certain goal. I usually write down my goals at the beginning of the year and then re-evaluate again when the next year starts. Normally, my goals won’t change too much. But my progress towards them does every year. So that’s why you have to…

Track your progress

Tracking your progress is absolutely crucial to you crushing your financial goals. Why? Because you have to know that you’re making progress! How will you know if you’re any closer if you don’t track your progress?

Tracking your overall progress is great, too, because it will give you hope and motivation when you see that you’re headed in the right direction!

My wife just couldn’t believe me at first that it was possible for us to become millionaires. But I explained that it doesn’t just mean you have a million dollars sitting in a bank account that you can spend at will. It’s more than that. It’s your entire net worth, or what you own minus what you owe. And I visually showed her how we were making progress with what we owned and decreasing what we owed (just our home mortgage). And if we kept going on the same path, it would lead us to having a million dollar net worth!

Make sure you track your progress as often as possible so that you know for a fact you’re moving in the right direction! Again, I’m a financial nerd so I check our progress monthly.

7 tips for achieving all of your goals

1. Don’t have too many goals

Whenever you’re setting goals for yourself, make sure that you don’t make too many goals. Because nothing is worse than trying to hit 10+ plus goals at the same time. Some people have goals for every part of their life. That’s fine, but I just want to remind you that trying to do too many things usually means you don’t get anything done.

If you’re setting goals for yourself, I would set no more than 10-12 total financial goals and no more than 3-4 BIG life goals. If you set more than that, you’re gonna’ be trying to do a lot of different things for a bunch of different goals. It’s just too much. You’ll end up only making a little bit of progress and not hitting any goals.

Also, make sure your goals don’t conflict! There’s nothing worse than trying to work toward two different goals and not being able to make any progress. If you have two goals, the first being “I don’t ever want to borrow money again,” and the other being, “I want an 830 credit score,” those are two conflicting goals and that won’t work.

The two goals, “I want to pay off my home in 5 years,” and “I want to be a millionaire in 15 years,” are two goals that work together perfectly. Because as you move toward paying off your home, you’re also building your net worth and working toward millionaire status (as long as you’re not borrowing money elsewhere).

Make sure you don’t have too many goals!

2. The BHAG

Ah, the BHAG. The Big Hairy Audacious Goal. A BHAG is an absolutely HUGE goal that is, as Jim Collins explains in the post I linked below, “a powerful way to stimulate progress. A BHAG is clear and compelling [goal], needing little explanation…”

Here are two examples of BHAGs:

The USA and Russia trying to reach the moon for the first time.
Boeing trying to commercialize a jet aircraft for the first time.
Tesla trying to commercialize an electric vehicle for the first time.

These goals, when it comes to your personal finance, can be as simple for you as getting out of debt in 12 months, paying off your home early, or trying to pay for a rental home in cash. You decide what your BHAG is.

My two personal BHAGs (that I’ve already stated) are:

We want to get our home paid off in 5 years.
We want to be net worth millionaires by 45 years old.

Take a few minutes to think about your Big Hairy Audacious Goal and if you don’t have any, make one! If you’re interested, this article here on Jimcollins.com explains the BHAG in its entirety.

3. Make sure they’re written and displayed in front of you!

Did you know that just writing down your goals makes you 42% more likely to achieve them? Yep, this post here on bucketlistjournal.co cites this 2007 study here by professor Gail Matthews of the Dominican University of California.

This post here, called, “Keep Your Goals in Front of You,” cites that study as well but also states that, “High achievers do more than set goals. They keep those goals in view all the time.”

You want to see them every day. Write them out and put them up on your wall, dry-erase board, or vision board. That will give you motivation to continue on with your goals and remind you every chance you get to see them. Don’t just set your goals and forget. Always keep up with your goals by having them in your mind AND in your view.

4. Get help with your goals

Getting help working toward your goals is one great way to alleviate at least a little bit of the pressure from doing everything completely on your own.

Here are a couple of tips for getting help with your financial goals:

Advice from others: getting advice from others around you can be a good way to find the right direction toward each goal.

Online programs and courses: you might have to pay but these can be invaluable on learning about how to achieve your financial goals.

YouTube videos: there are thousands of videos on different financial topics that can help you make progress toward your financial goals.

Find mentors or online mentors: in today’s high-tech world, it’s incredibly easy to find mentorship from both real people and highly-successful people online.

For more on this topic, check out this article here on lifehack.org.

5. Consider the obstacles

Whether you’re working to become a millionaire or simply trying to save up your first $1,000 dollar starter emergency fund, there are going to be obstacles in your way. But I want to highlight a couple of things that might hold you back.

Your mindset

The very first obstacle to doing anything right financially could be your mindset. Too many people have a negative view of their finances and they just don’t think that they can improve them. You have to change that. Because you CAN do it! You CAN reach almost any goal that you put your mind to. If your mindset is blocking your progress, check out this post here on Ramseysolutions.com called, “How to Change of Mindset.”

Your imagination

Sometimes, your imagination starts thinking about all of the other obstacles in the way and gives them power over you. Having an “I can do anything mindset is good,” but there are real-life obstacles in the way of your financial goals like:

Emergencies
Low income
Extreme debt
Spouse not on board with the financial plan
Negative peers
Or any of the hundreds of other obstacles

Even if your mindset isn’t an obstacle for you, your imagination could be going in all kinds of directions because of those real life obstacles. Your imagination will think of all kinds of ways that those obstacles are going to stop you. But you aren’t going to let them. Here’s how you do it:

You need to write out any obstacles you might have and look at them. You want to stare them in the face to see that they’re not that big of a deal. Then tell yourself that you’re not going to allow those obstacles to stop you from achieving your goals.

So you’ve already written down all of your goals up to this point. Next, Write out at least 3 obstacles for each goal AND 1 possible solution you’ve got for each obstacle.

Like this ⬇️:

Goal 1 – “I want to be a millionaire by 45 years old.”

Obstacle 1 – Not enough income. My wife and I are slowly increasing our income

Possible solution – Continue increasing income by blogging more, working overtime at my full time job, and selling stuff online.

You will continue doing that for 2 other obstacles and finding a solution to those obstacles as well.

6. Goal obsession

There’s a fine line here for a lot of people. I wholeheartedly believe in being obsessed with your goals, especially financial goals. Again, I’m a financial nerd at heart so this is pretty natural. I am obsessed with my financial goals, and you should be too, but here are a couple of disclaimers.

Get obsessed if:

You’re single and don’t have to take care of anyone but yourself.
Also, if you’re young, you’ve got a huge amount of time so it’s best to start early to crush your goals as fast as possible.
It doesn’t interfere with work priorities or your family life.

But it’s possible to get too obsessed and have it start negatively affecting other big parts of your life.

Don’t get obsessed if:

You have a family and your goal obsession is interfering and causing stress in your household. This isn’t healthy and can cause damaged relationships.
If the goal is causing you physical, mental, and/or emotional pain such as not sleeping very much to hit a goal. This is okay short term but not long term.

But being obsessed with reaching your goals isn’t a bad thing. Just don’t let it cause you negativity, stress, and broken relationships. Keep perspective in your life and stay balanced in all of your obligations. Aside from that, live your life and have fun, too.

7. Be patient and work hard!

The last tip on this list is pretty dang simple: I want you to work as hard as you can and be patient while you’re working toward your financial goals. Because if you don’t work hard, you won’t really achieve anything. Having patience is also pretty tough. But if you can master patience, and continue with an extraordinary work ethic, you will almost inevitably hit any goal you go after.

You’ve got to have financial goals!

I mean, if you don’t have any financial goals, you might as well just not work and make money. What’s the point if you’re not making progress toward something? So you’ve gotta’ set financial goals that will both challenge you AND bring you happiness. That’s the fun part about working hard and achieving your financial goals: you find financial peace, financial independence, and some self-discipline along the way. So don’t wait. Start working toward your financial goals today!