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Personal Finance

How To Set Financial Goals

Written by Connor Mullins on Jun 28th, 2024 Time to read: 7 minutes

How to set your financial goals

Setting goals is an important step towards achieving financial security and stability. It can allow you to gain a greater understanding of your money and how you can use it to unlock your true potential. However, we understand that setting financial goals is often an easier concept in theory than in practice.

We also appreciate that money worries are common. And the statistics bear that out – recent research from National Debtline reveals that, heading into 2024, 24.9 million UK adults had concerns about their finances**. That equates to 47% – a significantly high proportion and one that we at True Potential would like to see come down.

Whether you count yourself among that number or not, setting financial goals can improve not just your economic picture but your overall well-being, which is especially crucial given the impact that money can have on your mental health**.

Recognising the need is one thing, though, and knowing how to set financial goals is another, which is why we’re here to offer expert guidance to help you along the way. In this step-by-step guide, we’ll cover several key points, from assessing your current situation and defining your targets to contingency planning and seeking professional financial advice.

1. Assess your current situation

Before you can define your financial goals, you need to build up a picture of your current circumstances. That means taking the time to carefully audit your income and expenses, as well as calculating any debts or savings you already have in place. From there, you will start to form an understanding of where the majority of your spending is done and how that may impact the targets you set.

Keep a detailed record of these numbers so that you have a clear starting point from which you can measure your progress over the coming weeks, months and years. There are plenty of budgeting apps you can use** that will enable you to keep a closer eye on your money and help you realise your financial goals

2. Define your financial goals

You’ll likely have more than one financial goal. If that is the case, it’s important to distinguish between them as it will create clearer paths towards success. One way to separate your goals is to group them by short, medium and long-term. Here are some examples of financial goals that would fall into those three categories:

  • Short-term goals: Creating an emergency fund, paying off a small debt or saving for a holiday.
  • Medium-term goals: Paying off larger amounts of debt, saving for a house deposit or saving to buy a new car.
  • Long-term goals: Building your retirement fund, saving for children’s school fees or investing in a second or holiday home.

Meanwhile, it can also help to make your financial goals SMART:

  • Specific: Decide exactly what you want to achieve, rather than general statements of intent such as “I would like to save more of my salary”.
  • Measurable: It should be simple to quantify the progress of your goal, for example as a percentage of a savings target.
  • Achievable: You should have the ability, knowledge and resources available to you to help you reach your targets.
  • Realistic: Any financial goal needs to be one that you can reasonably meet. For example, there is very little chance of doubling your pension pot within a few days or weeks.
  • Time-bound: This places a deadline on your goal and gives you an extra degree of accountability.

Once you’ve defined these financial goals you’ll be better placed to take the next step in the process.

3. Prioritise your targets

Everyone is unique, so there is no one-size-fits-all solution for this stage. What’s important is that you create a priority list that is tailored to your needs and situation. Balancing multiple financial goals can seem daunting but organising them efficiently will make everything feel much more manageable.

For example, you might decide that your highest priority is to pay off any outstanding debt against your name. Instead, you might feel more comfortable ticking off several short-term targets before you even begin to think about goals over the medium and long term.

Of course, your priorities will likely change as you move through different stages in your life. Maybe your focus for the immediate future is on developing your savings and investments*. As you get older, though, you might want to devote more time to thinking about how you can make the best use of your pension to improve your quality of life in retirement*.

4. Create a detailed plan for each financial goals

As the saying goes, “a goal without a plan is just a wish”. So, once you’ve defined and prioritised your targets, you need a clear, actionable strategy for achieving each one. If you’re looking to build your emergency fund, you can set up automated payments that transfer money into a savings account before you have a chance to spend it.

Alternatively, if you’re looking to protect some of your income from capital gains tax**, you could place some of your funds into a Stocks & Shares ISA*. Whatever your objectives, the key is to devise simple, practical plans that work for you.

5. Identify potential obstacles

Your journey towards reaching your financial goals may not always be smooth sailing. There are bound to be hurdles to overcome along the way, so it’s important to prepare yourself for these and plan for contingencies. Significant, unexpected expenses – such as hefty household or vehicle repair bills – can soon derail your progress, which is why setting up an emergency fund can prove prudent.

In the wake of relatively high UK inflation rates, one option is to diversify your investments* and guard against the devaluation of traditional assets. Hopefully, any such obstacles prove minor bumps in the road. But if you’re aware of the potential threats when you first set your financial goals, you’ll be better placed to deal with them as and when they do arise.

6. Monitor and adjust your targets regularly

Your financial goals don’t have to be set in stone. If your circumstances change – for example, in the form of a promotion and a hike in salary – it stands to reason that your targets will adjust accordingly. Keep a regular track of your progress and, if you’re behind or ahead of where you want to be at any given time, you can always recalibrate the objectives you’ve set.

Let’s say you’ve received a windfall through an inheritance*, for instance. You would need to factor those additional funds into your calculations as the extra money might open up opportunities that were not previously available.

7. Celebrate your successes

Reaching any financial goal should feel like a major achievement and it’s important to mark the occasion. If your target was to save for a holiday, make the most of the experience. And know that for some goals – such as passing on the assets within your estate to your loved ones – you may not be around to see your planning come to full fruition. But when you do achieve your goals, harness that positivity and use it as motivation to set fresh targets, kick-starting the cycle all over again.

8. Seek professional advice

At various stages throughout the process of setting and then working towards your financial goals, it can prove prudent to enlist the help of an expert. We have a team of highly qualified financial advisers* who are on hand to support you along the way.

In our initial meeting, we’ll discuss and build up a picture of your current financial situation. The next step is to create a tailored plan designed to help you reach your goals, be it through maximising your potential for growth, diversifying your investments or limiting your tax liabilities.

We’ll review your plan and your financial goals on an annual basis and we’ll always be available to offer expert guidance and assistance if you need it. To unlock your true potential, speak to one of our advisers*.

With investing, your capital is at risk. Investments can fluctuate in value, and you may get back less than you invest. This material is not a personal recommendation or financial advice and the investments referred to may not be suitable for all investors.

Tax is subject to an individual’s personal circumstances, and tax rules can change at any time. ISA eligibility and tax rules apply. You should ensure your contribution does not result in your total ISA contribution within the tax year exceeding £20,000. This blog is for information only and is not personal financial advice.



*True Potential – accessed 24/06/24








**Data sourced from other – accessed 24/06/24

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With investing your capital is at risk. Investments can fluctuate in value, and you could get back less than you invest.

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