3 Key Signs You’ve Finally Reached Your Financial Goals
It feels like you’ve been working toward your financial goals forever. You’re pretty sure you’ve made progress, but you can’t quite tell if you’ve actually met your targets. So, how can you know with certainty that you’ve been successful?
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Well, there are three key signs that you’ve finally reached your financial goals. We’ll share those in this article, and also examine what to do once you’ve achieved each milestone and how to set the most effective goals possible. That way, you can keep creating the life you want, dollar by dollar.
Types of Financial Goals
Financial goals are specific results you want to achieve with your money within a set timeframe. Your goals can be short-term or long-term.
Examples of short-term goals can include saving up $2,000 for your vacation next year or paying off your $800 credit card balance in the next six months.
Long-term financial goals can consist of amassing $100,000 for a down payment on a house or investing $1 million for retirement.
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How To Tell You’ve Been Successful
If any of the following apply to your situation, then you know you’ve finally reached your financial goals.
You Followed a Plan
You may want to save $2,000 for your vacation next summer, but how will you accomplish that? You have good intentions, so you’ll likely stash some cash aside.
But chances are you won’t hit your target unless you have a plan. A goal without a strategy to accomplish it is just a wish.
However, if you create and follow a clear plan, you increase your odds of success significantly. For example, your plan could include the following steps:
Break my goal amount into manageable chunks by calculating how much I need to save monthly.
Set up direct deposit or automatic transfers to my savings account for that amount.
Boost my savings account balance with my tax refund or other windfall.
The Numbers Speak for Themselves
Managing your money involves doing the math, and the numbers you crunch don’t lie. By looking at the mathematical proof, you can undeniably confirm that you’ve achieved your financial goal.
For example, let’s say you set a goal to pay off the remaining $1,500 on your car loan by July of this year. If your auto loan account has a zero-dollar balance as of the end of July, you did it! However, if you’re still getting a billing statement from your lender in August, you missed the mark (unless there’s been a mistake).
You Feel Accomplished
While dealing with financial matters entails looking at the numbers, real emotions are involved, too. You should feel proud to have consistently worked toward your money-related goals.
But at what point should you feel accomplished?
“Personal finance is personal, so the point at which someone feels they’ve ‘made it’ or achieved a specific financial goal will vary,” said R.J. Weiss, CFP, CEO of The Ways to Wealth.
What To Do After Hitting Your Goals
Once you realize you’ve reached your financial goal, it’s OK to celebrate — you’ve earned it. But what do you do next?
“The first thing you should do when you achieve your goals is to set up new ones. After this, you should begin to give back to those who may have helped you achieve such success, especially family and friends,” said Michael Hills III, financial advisor at Apex Wealth.
Effective Goal-Setting
Not all goal-setting methods are equal. Here’s some expert guidance to help increase your chances of success.
Hills said, “When setting financial goals, I like to work backward. What are your hopes and aspirations? How can you get there? What can you do today to help you get closer to achieving those goals? Try making these goals as specific as possible and time-oriented to ensure efficiency.”
Weiss has a similar viewpoint, telling us, “The types of financial goals that make people feel like they made it and progressed financially tend to stick to the SMART Goal framework. This means setting Specific, Measurable, Achievable, Relevant, and Time-Bound goals. Ultimately, you want to be able to answer yes or no [to] whether or not you achieved a specific goal. If you set a goal right, there shouldn’t be a gray line.”
He continued, “For example, a goal like feeling financially free will likely make you feel like you need more money as you go through life. So, $100,000 goes to $1,000,000, which goes to $2,000,000.
“But a SMART goal that says, ‘I accumulate enough assets in my retirement accounts by age 65 so I can live off of a 4% withdrawal rate’ would be a SMART goal. Here, you can quickly answer yes or no and, just as importantly, measure throughout the journey whether you’re getting closer or further from your goal.”
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