How to Set New Money Goals - NerdWallet (2024)

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It’s natural to feel lost or overwhelmed as you begin to think about setting and balancing financial goals. Start by answering this question: How do you define success?

For some, success is a luxurious lifestyle complete with a big house and fancy car. For others, it’s having enough financial security to avoid stressing about money. Visualize where you want to be in the future and set aspirations that align with your values. Make sure to leave room for immediate goals as you form a plan.

Here’s how to set new money goals.

1. Find your inspiration

Think not just about what you want to do, but why you want to do it. Attaching reasons to your goals can put them in perspective and fuel motivation. For example:

  • Build up an emergency fund so you can afford to pay rent if you lose your job.

  • Get rid of credit card debt so you can put your income toward a wedding instead of interest payments.

2. Examine your situation

After giving it some thought, you may have multiple goals in mind and don’t know what to do next. Or maybe you don’t have specific goals. That’s OK. Looking at where you stand right now can help set you on the right trajectory, whether your ambitions are short term, long term or have yet to be identified.

Start by assessing your income, income tax situation, budget and net worth. “Having an understanding of these four things will help determine goals and prioritization of those goals,” says Steve Martin, wealth planning advisor at Oasis Wealth Planning Advisors in Nashville, Tennessee.

We’ve listed some example financial goals below, and recommend attacking them in this order:

Create a budget

If you don’t have a budget, make one. This can keep all your other goals on track by preventing overspending and under-saving. We suggest taking the 50/30/20 budgeting approach. That means allocating 50% of your income toward needs, 30% toward wants and 20% toward savings and debt repayment.

Build an emergency fund

A healthy emergency reserve acts as a safety net during financial shocks like an unexpected bill or job loss. You can start with aiming to have $500 on hand, which can cover many unexpected expenses. Over the long haul, it's ideal to save up enough to cover three to six months of your essential expenses — the needs portion of the 50/30/20 budget mentioned above.

Save for retirement

Retirement may be decades away, but it’s important to start saving as early as possible so that you have enough money to survive on when the time comes. Most experts recommend saving 15% of your gross income each year. If your employer offers a 401(k) and matches your contributions, take full advantage of that free money. Factor in whether you're managing money as a single person or working with a partner.

Pay off debt

Focus on paying down high-interest toxic debt first, like credit card debt or payday loans. Then, pay down lower-rate debt like student loans or a mortgage.

3. Think 'SMART'

Consider all the necessary pieces of a plan — not just the goal, but the steps you’ll take to reach it. Quentara Costa, a certified financial planner with Powwow in North Andover, Massachusetts, says a strong basis for setting any goal is to make sure it’s “SMART”:

  • Specific

  • Measurable

  • Achievable

  • Realistic

  • Time-bound

Say you want to save for a vacation. Lay out the details before you move forward: Pick a destination, decide when you want to go and estimate the cost. Determine whether this goal is doable and practical given your income, savings and expenses. If the goal seems out of reach, try to make adjustments before scrapping the idea entirely.

Maybe you’re not on track to save enough for a trip in six months. Push your deadline back to a year, automate your savings, or open a new savings account with a higher interest rate and a sign-up bonus to speed up your progress.

4. Write them down

After you’ve identified and vetted your goals, mark them down. This can keep objectives clear, organized and tangible. Fill out a worksheet or spreadsheet, or use a notepad. Check in periodically and track your progress. Once you’ve crossed off one goal, move on to the next.

5. Treat yourself

Setting goals doesn’t have to feel like a chore. Reward yourself for making progress and completing objectives. Once you’ve tackled high-priority goals like building an emergency fund, saving for retirement and shrinking debt, you can focus on more exciting goals. These might include making more money, investing, working from home, starting a business or saving for a major purchase like a car or house.

What's next?

  • See a breakdown of your income and expenses.

  • Compare second home mortgage rates.

  • Learn the secret to optimizing credit card rewards.

How to Set New Money Goals - NerdWallet (2024)


How to Set New Money Goals - NerdWallet? ›

Create a budget

How do I set financial goals in NerdWallet? ›

NerdWallet recommends the 50/30/20 budget principles: Put 50% of your take-home pay toward needs (housing, utilities, transportation and other recurring payments), 30% toward wants (dining out, clothing, entertainment) and 20% toward savings and debt repayment.

What is the 50 30 20 rule of money? ›

The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).

What is the 75 15 10 rule? ›

The 75/15/10 rule is a simple way to budget: Use 75% of your income for everyday expenses, 15% for investing and 10% for saving. It's all about creating a balanced and practical plan for your money.

Is the 50 30 20 rule realistic? ›

For many people, the 50/30/20 rule works extremely well—it provides significant room in your budget for discretionary spending while setting aside income to pay down debt and save. But the exact breakdown between “needs,” “wants” and savings may not be ideal for everyone.

Does using NerdWallet affect credit score? ›

Checking your credit score on NerdWallet only prompts a soft inquiry on your credit report - not a hard inquiry - and will never impact your score in any way, no matter how often you check it. This article includes more detail about this: Does Checking My Credit Score Lower It?

How to budget $5,000 a month? ›

Consider an individual who takes home $5,000 a month. Applying the 50/30/20 rule would give them a monthly budget of: 50% for mandatory expenses = $2,500. 20% to savings and debt repayment = $1,000.

How to budget $4,000 a month? ›

For example, say your monthly take-home pay is $4,000. Applying the 50/30/20 rule would give you a budget of: 50% for mandatory expenses = $2,000 (0.50 X 4,000 = $2,000) 30% for wants and discretionary spending = $1,200 (0.30 X 4,000 = $1,200)

How much savings should I have at 50? ›

By age 50, you'll want to have around six times your salary saved. If you're behind on saving in your 40s and 50s, aim to pay down your debt to free up funds each month. Also, be sure to take advantage of retirement plans and high-interest savings accounts.

How do I set myself up financially? ›

  1. Choose Carefully.
  2. Invest In Yourself.
  3. Plan Your Spending.
  4. Save, Save More, and. Keep Saving.
  5. Put Yourself on a Budget.
  6. Learn to Invest.
  7. Credit Can Be Your Friend. or Enemy.
  8. Nothing is Ever Free.

How do millionaires set goals? ›

The first step in becoming a self-made millionaire is setting achievable goals and creating a plan to reach them. Start by outlining your long-term financial objectives and establish a timeline for reaching them. Then, break those goals down into smaller, actionable steps to help you stay on track.

What is the 5 rule in money? ›

The 5% rule says as an investor, you should not invest more than 5% of your total portfolio in any one option alone. This simple technique will ensure you have a balanced portfolio.

What is the cash Rule of 72? ›

It's an easy way to calculate just how long it's going to take for your money to double. Just take the number 72 and divide it by the interest rate you hope to earn. That number gives you the approximate number of years it will take for your investment to double.

What is the 20 10 rule tell you about debt? ›

The 20/10 rule of thumb tells you to keep your debts below 20% of your annual take-home pay and below 10% of your monthly take-home pay.

What is Rule of 72 in financial accounting? ›

The Rule of 72 is a calculation that estimates the number of years it takes to double your money at a specified rate of return. If, for example, your account earns 4 percent, divide 72 by 4 to get the number of years it will take for your money to double. In this case, 18 years.

What is an example of a setting a financial goal? ›

Some examples of long-term financial goals may include: Saving for a down payment on a house. Funding your retirement. Paying off large debts (e.g., credit cards, student loans, mortgage, etc.)

How do I set my monthly savings goal? ›

How to set a savings goal
  1. Name your goal.
  2. Work out how much to save each month.
  3. Set up a standing order.
  4. Shop around to find the best place for your savings.

Does NerdWallet help with budgeting? ›

Downloading a budget app or personal finance software may help, or get informed with a budgeting book. Or become a NerdWallet member for free. We'll track your spending in one place and identify areas where you can save. Compare NerdWallet vs. Mint, and learn how our app uses the 50/30/20 budget.


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