Financial Goal Setting

By: Michael Foster CFA, CFP®

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Happy New Year! Am I still allowed to say that now that we’re a couple weeks in? 

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Either way, I hope the beginning of 2024 has been relaxing and rejuvenating. The blank slate of the new year can be a good opportunity to set and (hopefully) achieve new goals. It might seem silly to target lifestyle changes in the name of a year changing by one number, but I always do it anyway.

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Sometimes I hit these goals, but often I find that the lofty goals I set may not always get 100% to where I planned. I still can’t play an improvised guitar jam with ease (2021), I didn’t read every book on my list (2022), and I’d be lying if I said my Apple Watch Move Ring was completed on a daily basis (2023). That being said, I did practice guitar more and took lessons, I read much more than I had in prior years, and improved my personal fitness through exercise including running a half marathon. I’d still say that qualifies as a win despite not technically checking the “goal completed” box, and I feel good about that. Progress is progress! 

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I find people can feel most drained around not hitting financial goals. These goals often feel highly consequential, comparison to others can creep in, and there’s no shortage of talking heads making you feel bad for something you may or may not be doing. I encourage you to give yourself some grace, reflect on if things are moving in the right direction, and figure out what works for you and your family. I wanted to provide some high-level thoughts and personal methods below on two common financial goals, budgeting and savings. 

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Budgeting

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Some want to get very granular and track every dollar to where it’s going, while others want to broadly have a target spend number per month. If they’re below the spend number, they feel good about it. There are apps that automate and categorize, spreadsheets of differing complexities, and good old-fashioned bank statement balancing methods. My advice if you’re setting budgeting goals is to try new things to see what works for you and your family. 

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Personally, my wife and I use a custom spreadsheet that tracks a few broad spending categories while rolling up a final monthly spend number. We then compare that to prior months and a target budget to see how our money was spent. We try to quickly meet weekly to discuss. This is what works best for us. Among others, I’ve tried getting very detailed in YNAB, using the automation from Mint, and simply depositing a certain number into my checking for discretionary spend. These methods work for many but didn’t gel as well for me. I learned what I liked and disliked through multiple budgeting methods. Figure out what works for you and stick with it.

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Savings

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If you’re trying to save more, I suggest automating what you can. This means taking advantage of employer-based plans drafting from your paycheck, sending recurring contributions to outside accounts, and setting up different accounts for different purposes. Personally, I try to think of our savings as money that never even hits our bank account, because we automate it to separate accounts for different purposes.

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First, my wife and I each are covered by an employer-based retirement plan. We invest in these accounts for the tax benefits, employer match, and long-term retirement. Our contributions are deducted directly from our paychecks. 

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We also set up a high-yield-savings account meant for goal purchases in the short-term. For us, that’s buying a home, but for you it could be saving for a car, home repair, or other cash needs in the not-too-distant future. We also treat a portion of this account as our emergency fund, but you may want to have that entirely separate if bucketing that works better for you. 

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Many may also have outside investment accounts meant for longer-term retirement. These can include a Roth IRA, taxable brokerage account, or maybe an individual IRA if certain conditions are met. We automate investment in these accounts through our paychecks as well. 

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By the end of all of the deposit automation, the money that hits our actual checking account is meant for our budget. We do build in a small buffer that goes into our savings account to avoid having to transfer between accounts when we miss our budgeting goals. 

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There isn’t a silver bullet or perfect way to go about achieving these and other financial goals, but you can take steps in the right direction by trying new things and figuring out what works for you. Even small steps in the right direction can help you to get more on track. If you ever have questions or want to discuss financial goal setting in a deeper way, don’t hesitate to reach out. If I don’t answer immediately, it may be because I’m trying to break 80 on the golf course (2024).