Are you ready for your next milestone? Maybe you’re engaged and planning a memorable wedding. Or you’re ready to buy a house. An important step to achieving these special moments is simple: setting concrete goals. Financial goal setting doesn’t have to be complicated — here’s how you can do it yourself with smart tools that can help simplify saving along the way.
1. Start by taking financial inventory
Before you begin thinking about all the saving (and spending) you’d like to do, it’s a good idea to see where you’re starting. Assess your current financial situation by reviewing all of your accounts, from checking and savings to retirement, as well as noting any debt or loans you are paying back.
This process can also help you identify areas where you may want to set financial goals. Plus, having a strong understanding of where you started will give you a baseline to look back on as you begin saving.
This is also a good time to review your budget, if you have one. (If not, creating a budget may be a goal to consider.) While you might need to adjust your current budget as you introduce new financial goals, it doesn’t hurt to make note of what habits have or haven’t worked for you.
Learn more: See how Ally’s buckets and boosters help you save even faster
2. Define your financial priorities
Now that you have a clear picture of where you stand financially, it’s time to start thinking about where you want to go. You don’t have to get specific yet, but consider the major goals you hope to achieve, such as paying off all credit card debt, solidifying an emergency fund or taking an extended vacation. Write your ambitions down and think about which matters most to you.
3. Create S.M.A.R.T. goals
After your brainstorming session, it’s time to dive into the nitty gritty of goal setting. The very first step to achieving a goal is also one of the most important: Clearly define what your goal is. One of the best methods for doing so is using the S.M.A.R.T. acronym: Specific, Measurable, Achievable, Relevant and Time-bound.
Let’s apply this method to buying a car. Using the S.M.A.R.T. framework, let’s make this an actionable goal: I want to buy a small hybrid SUV, up to $30,000 in two years. This goal is…
Specific: You named the type of car you want.
Measurable: You can measure your savings progress toward a certain amount.
Achievable: This goal likely isn’t wildly out of reach (such as, for instance, buying a luxury yacht next month).
Relevant: This goal makes sense for your life and timeline.
Time-bound: You want to make the purchase in two years.
Remember, it’s okay if your goals are challenging as long as they are realistic. You don’t want to set goals or parameters for yourself that are going to be impossible to meet or detrimental to other areas of your life. That can lead to discouragement, lack of motivation and ultimately abandonment of your goals.
4. Develop an action plan
With your eyes on the prize, it’s time to make an actionable plan to get there.
First, write down your goal. Physically logging your goals will keep your objective clear, give you a point of reference and serve as a simple motivational reminder when you need it. You know what they say: Seeing is believing. And keeping a written records of your goals is a powerful tool that can help you visualize success.
Map out your deadlines: Now you can create a plan. Start by splitting your targets up by short, mid and long-term goals. Since you already made a list of your financial priorities, you have a head start here.
Create mini milestones within your goals: Next, think about what steps you need to take each week or each month to make progress. If your intention is to save for a down payment on a home, for example, your plan may include cutting one expense from your budget each month and transferring that money to your home savings. Or if you want to increase your retirement nest egg, your plan could be to boost your 401(k) or IRA contribution by 1% every six months until you reach a certain percentage.
Bonus: See how you could reach your goals faster with our savings goal calculator
Ally Bank Savings Account’s smart savings tools, like buckets, Surprise Savings, Round ups and Recurring transfers can help you unlock additional savings to help meet your goals. Use our calculator to see how these features can help you reach your goals more quickly:
Reach your goals one step at a time
It can feel overwhelming to set and achieve financial goals, but by taking a step back, making a plan and using helpful tools along the way, you could reach your goals faster than you think.
