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How to Set Financial Goals

Are you meeting your savings goals? Some reports say that 1 in 6 millennials already have over $100,000 saved, while other reports say that half of millennials have nothing in savings. In reality? Most of us are somewhere in the middle. There’s no magic amount of money to have in your savings account. After all, there are a lot of factors going into how much you can save – income, cost of living, student loans.

When you’re early on in your career, it’s more important to have defined financial goals that you’re working towards. If you don’t have a goal, it’ll be easier to spend indiscriminately, since there are no defined consequences. So if you’re unhappy with how much you’re saving, it’s time to get serious about setting financial goals. Here are 7 practical tips for financial goal setting.

1. Make Sure Your Financial Goals are SMART

Have you heard of SMART goals? The acronym became popular in the 1980s specifically to improve management goal setting, but they’re a great way to set a variety of goals. SMART stands for Specific, Measurable, Achievable, Relevant and Time-Related. Let’s apply those criteria to financial goals:

2. Make Sure Your Financial Goals Are Specific

First off, you have to think about what you want your goal to be. Seems like a no-brainer, right? But if your goal is too vague, it’ll be hard to figure out when you’ve met your goal, and even harder to stick to it. A lot of financial goals sound something like, “save more, spend less.” But how do you stick to that? If the next day you order a small coffee instead of a large, and put $5 into your savings account, you technically just met your goal! But you didn’t meet the intent behind the goal – becoming more fiscally responsible. Here are a couple of examples of Specific goals:

Save 10% of my income each month

Spend less than $50 on lunches out each week

Save enough for a down payment on a house

Save $1,000

While simple, each of these goals have a clear purpose and outcome – and they’ll still lead to you saving more and spending less! Learn how an interest-bearing savings account or a CD account can help you achieve your savings goals.

3. Make Sure Your Financial Goals Are Measurable

How do you know if you’re meeting your goal? You have to be able to measure it. This goes beyond just knowing when your goal is completed – you also need to track your progress along the way. If your goal was specific enough, you probably won’t have to adjust the goal itself, you’ll just need to plan out how you’re going to track progress. For example, if you’re trying to save $1,000, measuring success is pretty clear-cut: once you have $1,000 in your savings account, you’ve me your goal. Depending on how large your goal is, you can define checkpoints along the way. So before you have $1,000 saved, you might plan to have $100 saved each month to reach the final goal.

4. Make Sure Your Financial Goals Are Achievable

The easiest way to guarantee you’ll fail at keeping your goal? Setting yourself up to fail. Saving $100,000 in a year is impossible if you only make $50,000. While that might be extreme, even more realistic-sounding goals might not be achievable for you. Take saving 10% of your monthly income. This is a great goal, but when you’re just starting out, an entry-level income might only cover your basic expenses and loans, with not enough left over to save a full 10%.

5. Make Sure Your Financial Goals Are Relevant

While defining your goals, you need to take a second to think about why you’re making the goal in the first place. What are you trying to achieve overall? It might not make a lot of sense to be saving for a down payment if you’re not planning to buy a house for another 10 years. Focus on making sure your goals are relevant to your plans.

6. Make Sure Your Financial Goals Have Clear Timing

Lastly, you need to make sure your goal has a start and end date. The timing should also be relevant and achievable, but without a timeframe to stick to you’ll have a hard time being successful. The goal will just become something you’ll eventually try to do, and not lead to any long-term habit changes.

7. Set Short-Term and Long-Term Financial Goals

Now that you know how to define a single goal, it’s time to think about how to set multiple financial goals that are complementary. When it comes to finances, you need to think both in the here-and-now and plan for the future. While you might still be early in your career, it’s never too early to start considering a retirement plan. You can also vary the size of your financial goals, like putting $500 away for gifts throughout the year and saving up to buy a new car.


–Save $1,000: I will save $1,000 in the next year, opening a new emergency savings account. I’ve planned the amount I need to save each week. I’m planning a 6-month checkpoint to measure my progress. I will meet my goal when I have $1,000 in my account.

–Save 10% of my income each month for the next year: I can cut back some everyday spending without missing any loan or utility payments. Half of my savings will go into an emergency savings account, and the other half of my savings will go towards a couple of weddings I’m in next year. I’ll set up an automatic transfer every 2 weeks after I receive my paycheck to help me make my goal. I’ll check in every month to make sure I haven’t overspent or taken anything out of my savings account. My goal will technically end after a year, but I’ll reassess then to decide if I want to keep saving.


–Spend less than $50 on lunch each week: This is a long-term habit I want to form instead of a savings goal, although I do want to use the leftover money from lunches to pay down debt. It will take time to achieve this goal while I research cheaper lunch options and start meal planning more at home. For the next 3 months I’ll progressively step up the number of weeks each month I spend less than $50 a week on lunch. By Month 4 I plan to have fully implemented my goal. I’ll reassess once a year to make sure $50 a week on lunch is still reasonable, as well as reassess any time my employment or living situation changes.

–Saving for a down payment on a house: I’d like to buy a house in the next 3 years, and I feel stable in my employment and community. I prequalified for a mortgage to see how much I could afford to pay on a mortgage each month, determined my price range for buying a home accordingly, and calculated a 20% down payment. I’ve built a monthly savings plan to help me reach the number I want to pay down on a house, and plan to check in on my progress every 3 months. I’ll also be visiting my local bank to discuss saving options to make sure I’m earning a good interest rate. My goal will be achieved when I get the keys to my home!

8. Define, and Redefine, Your Financial Goals as Needed

Once you’ve defined your financial goals, that doesn’t mean they’re set in stone. You should take your goals seriously, but you should reassess anytime your financial situation changes drastically. For example, if you have an emergency that causes you to drain your savings account, you’ll need to shift your focus to rebuilding your account. You should also take stock once or twice a year of your goals to see if they still meet all of the SMART requirements.

Setting financial goals may feel aspirational, but if you set the right goals you’ll be able to see them to fruition. Learn more about how Santander can help you reach your savings goals.

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