How to Set Smart Financial Goals for 2020: Plan Your Future

Financial Advice


7 min. read

By: FCU Team

If this is the case, you might need to reevaluate the way you come up with goals related to your finances. Read on for some tips that will help you set smart financial goals that you can actually accomplish in 2020.

The Importance of Financial Goals

For some people, the importance of setting regular financial goals is obvious. Others have more of a negative attitude toward this process, though, and they might wonder why they even need to bother. 

It doesn't matter if you feel this way because you're doing okay financially and can pay all your bills on time or because you're in such a bad situation that you don't think you can get out of it. In either situation, setting financial goals is more important than you might realize.

The following are some of the top reasons why you ought to make financial goal-setting a priority this year (and every year moving forward):

  • Setting and achieving goals can help you feel happier and motivated to tackle other areas of your life
  • Setting finance-specific goals can help you ensure you remain in a good financial situation
  • Setting finance-specific goals is the first step to improving your financial situation and making things better for yourself and your family
  • Good goal-setting practices make it easier for you to track and see progress, thus keeping you motivated to make more positive changes
  • Setting financial goals helps you overcome bad habits and set yourself up for success in the future

This last point is especially important. You might be doing "fine" now. Will you always be fine if you continue on this trajectory, though? If the answer is "no" or "I'm not sure," you might want to reevaluate your stance of financial goal-setting.

Characteristics of a Smart Goal

Now, let's clarify what defines a "smart" financial goal. You'll have an easier time figuring out how to set achievable financial goals (and how to set life goals, for that matter) after you gain a clear understanding of the SMART goal framework.

SMART stands for "Specific", "Measurable", "Achievable", "Relevant", and "Time-Based". Here's a breakdown of what each of these terms means:


First, your financial goals need to be specific. If you come up with something vague like "I want more money" but don't think about the details, the likelihood that you'll end up making more money is slim. Ask yourself what you want and what you're going to do to ensure you get it. For example, "I want to earn more money, so I will pick up a side-hustle this year and deposit all the money I earn from it into my savings account."


Second, the goals you set must be measurable. You need to be able to track your progress and have a specific target to hit. You could refine the original goal mentioned above to make it more measurable by saying something like "I will earn an extra $50 per week and deposit that money into my savings account." Now, you have a specific number to aim for when working your side hustle.


Third, make sure your goal is achievable and realistic. Whether your aim of making more money has to do with preparing for retirement or saving up for a new car, don't set yourself up for failure by planning to save an amount that is way too high. If you know that, realistically, you can only work your side hustle one day per week and earn about $50 on that day, that's where your goal should be. Don't plan to earn an extra $100 if you don't have a plan for how you're going to make that happen. If you do this, you'll be more likely to get discouraged and give up on your goal altogether. 


Fourth, set a financial goal that's relevant to you and your life. It should provide you some kind of tangible, measurable benefit. Setting a goal to put aside $50 a week from your side hustle so you can save up for a new car is a relevant goal if you've been wanting a new car or need to replace your existing car.


Fifth, your financial goals should be time-based. Give yourself a deadline so that you feel a sense of urgency and know that you need to take action within a certain time frame. Let's take the goal of saving $50 per week. When writing down this goal (more on that in a minute), make a plan to deposit that $50 every Friday, for example. That way, by the end of the year, you'll have saved $2,600.

How to Set Smart Financial Goals

Now that you know what a SMART financial goal looks like and have some good financial goals examples to reference, it's time to explore your own personal goals related to money management. Here are some tips to keep in mind as you begin the process that will help you set goals that align with this framework:

Find Your "Why"

Maybe, deep down, you know that you ought to set some financial goals for yourself. You might be having a little trouble getting motivated to actually take the first step toward saving more money, educating yourself on investments, or doing anything else that gets you closer to the version of yourself who is "good with money."

To overcome this obstacle, sit down and think about why you want to have a better handle on your finances. Do you want to save for something specific? Do you want to make sure you have enough money to live comfortably after retirement?

Finding a greater purpose for your goals will make it easier for you to set and stick to them.

Assess Your Situation

To make sure your financial goals are achievable, it's important to get a handle on your current situation.

This means doing the thing many of us dread and looking at your bank statements. Pull up all of your information and take a look at what your spending and saving have been like over the last year.

Are you spending less than you earn? What's your credit score? Are you up to date on all your loan and credit card payments?

It can be painful to assess where you're at. The sooner you do this, though, the sooner you can start turning things around. 

Write Down Your Goals

Writing your goals down increases your likelihood of sticking to them.

If you're just storing everything in your head, it'll be easy to let them fall by the wayside when life gets busy. You may find that you're less motivated to continue pursuing them, too, especially when the sheen of the new year and new decade starts to wear off and you get bogged down by everyday concerns. 

Break Down Your Goals

If you have a big financial goal for yourself, try to break it down into smaller and more manageable ones.

For example, let's say your initial goal was to save $2,600 by the end of the year so you could afford a down payment on a car. Instead of sticking to that one yearly goal, you'd do better to break it down into weekly goals (saving $50 per week).

Setting aside $50 seems a lot more manageable than $2,600, right? When something seems more doable, it'll be easy for you to actually go ahead and do it.

Schedule Check-Ins

It's also easier to stick to your financial goals when you schedule regular check-ins with yourself. You may have done the hard thing by evaluating your bank accounts once. That's not enough, though.

You need to check on your accounts on a regular basis to ensure you're sticking to your goal. Checking in once a week or once every other week might be a good starting point for you. This gives you a chance to look at how you're doing and make adjustments to your goals as needed.

Thanks to online banking, it's easy for you to handle money management basics like looking at your accounts and making payments from the comfort of your own home, so you have no excuse not to check-in with yourself often.

Reward Progress

When you set measurable goals and check-in with yourself on a regular basis, it's easy to see whether or not you're on track toward meeting your bigger goal.

When you hit small milestones associated with your bigger goal (saving $50 a week for four weeks, for example), reward yourself. Doing something special can help you remain motivated and make the process of achieving your goals more enjoyable.

Just make sure your reward doesn't derail your progress. If you're trying to save money, going out and treating yourself to an expensive dinner probably isn't a good idea. Reward yourself with an extra hour of TV or a long bath instead. 

Bonus Tips for Staying on Track

There are plenty of steps you take to set smart financial goals (and SMART financial goals). If you follow the tips listed above, you should have a much easier time staying on track and accomplishing your goals. You might find that you need a little extra help to turn your dreams into realities, though.

Here are some bonus steps to follow that will help you ensure you're on track to achieving everything you want when it comes to your finances:

Create a Budget

It's much easier to stay on track with financial goals of all kinds when you have a budget to follow. After you do your initial evaluation of your finances, sit down and put together a budget that makes sense for you and your family.

Include any specific savings goals you might have in that budget. That way, every dollar has a job, and you'll be less likely to let your goals fall through the cracks. 

Make It Automatic

You'll be less likely to spend the money you intended to save if you automatically set it aside in a different account. Most of the time, you can make arrangements with your bank to deposit a certain amount of money in a separate account every time you get paid without you having to do any transferring. This works for things like investing in your future with retirement accounts or high-yield savings accounts, too.

Enlist an Accountability Partner

Gretchen Rubin, an author and habit change expert, often talks about the importance of creating outer accountability. Outer accountability helps many people stick to their goals because they know someone else is expecting them to do so.

For example, you might want to tell a friend that you have a specific savings goal. That way, they can keep you on track and will help you resist temptation when an opportunity to spend arises. 

Set Up Separate Accounts

It's also a good idea to set up separate accounts for your specific goals. Instead of throwing everything into one savings account, create an account just for vacations or just for retirement. Doing this helps you keep your money separate and avoiding spending what you don't have.

Start Setting Great Financial Goals Today

Figuring out how to plan financial goals can be just as tricky as sticking to them.

If you follow the guidelines laid out above, though, you'll have an easier time with the financial goal-setting process. Remember these tips and you'll be able to set realistic goals that help you improve your financial situation and get more money in your bank account where it belongs.

Do you want to learn more about managing your money and staying on track with your financial goals? If so, check out the Financial Education page of our site today. You'll find lots of useful resources here that will help you on your journey to becoming a finance-savvy individual.