How to Set Financial Goals that Will Positively Impact Your Future

If you could hop in a DeLorean time machine and travel back to the future (Ten points if you got the reference!), then what would you do first?

Maybe you’d visit your Future Self to see if spaceship travel is now the norm or ask if colonies on Mars are actually a thing.

While time travel isn’t possible *yet*, there are ways that your Present Self can actually help out your Future Self. One way? Set financial goals now – both short-term and long-term – to make a huge impact on your future.

Check out the differences between short-term and long-term financial goals below and the three key steps to set S.M.A.R.T. goals!

What are short-term vs. long-term financial goals?

The definitions of short-term and long-term financial goals might seem obvious.

You set short-term financial goals to achieve things with your money within one month to one year, such as saving $200 to buy a new smartphone. You set long-term financial goals to help you achieve things with your money in the distant future (aka two years and beyond), like saving for college.

Although both types of goals strengthen your finances and help you avoid going into debt, they each have a different purpose. And though it might seem hard to believe now, long-term financial goals are just as important as short-term ones.

We get it. Goals for future things like a car or college can feel like a loooooooonnggg way off. But as humans, we sometimes focus too much on short-term financial goals. Why? We’re driven by instant gratification. We want our relatively Present Selves to be happy! We’re not as interested in the needs of our Future Selves. (Sorry, Future Self!)

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Known as (#nerdalert) “hyperbolic discounting,” present money is worth more to us than future money. It’s easier to set goals for things in the near future, like new sports shoes, because we know that the reward isn’t too far away.

But here’s the thing…short-term views on money leave our Future Selves scrambling to pay for things, which can also lead to debt. That’s why long-term financial goals are essential.

Don’t get us wrong – short-term financial goals are important! Just make sure that you’re setting and achieving long-term financial goals right along with your short-term ones.

Need a little help? Here’s how to set powerful long-term financial goals of your own.

Step 1: Create a list of general financial goals.

Brainstorming time! Get out the Notes app on your phone or an actual pen and some paper. Write down what you would like to achieve with your money in the next two years and beyond.

Don’t overthink it – just write down whatever comes to mind. To help you get the wheels turning, think of it this way: What do you want your future to look like? What goals will help ensure that your Future Self is financially healthy and happy?

Is your Future Self going to college? Do you plan on moving from home? How about driving your own vehicle? You can also think of goals for things like a backpacking trip through Europe with your best friend after graduation.

Your list can be general at this point. It might look something like this:

Goal 1: Volunteer teaching English for a month in South America
Goal 2: Go to my dream college in Texas
Goal 3: Save for a new(ish) vehicle

Once you have a list of ideas, narrow it down to between three and five top goals. (Hint: Having a goal mindset is great, but you don’t want to become overwhelmed.)

Also, think about why you want to achieve these goals. Do you want to go to your dream school because it has an amazing music program? Or maybe you want a vehicle so you can drive yourself to school every day.

Knowing your “why” helps you stay motivated to achieve your goals. Write down your reasons beside each goal.

Step 2: Make these goals S.M.A.R.T.

Now that you have a list of financial goals, it’s time to think S.M.A.R.T. This acronym means that your goals are:

Specific
Measurable
Achievable
Realistic
Time-bound

Let’s put this acronym into practice. Take the general long-term financial goals above. If you apply the S.M.A.R.T. acronym, then these goal might look something like this:

Goal 1: Save $1,000 for my volunteer trip to Peru by June 1, 2023
Goal 2: Save $5,000 for my Texas A&M college fund by August 1, 2023
Goal 3: Earn $7,000 for a car by January 15, 2022

Now we’re talking. These goals are very Specific. You know what you want to achieve with your money. They’re Measurable because you can track how much you need to save per month to reach them.

These goals can be Achieved by the target deadlines, which also makes them Realistic. And they’re Time-bound since you’ve set those deadlines.

Good work! One last step to help you achieve these goals.

Step 3: Create smaller goals to achieve your long-term goals.

Once you have three to five S.M.A.R.T. long-term financial goals, create smaller monthly goals to put your plan into action. This approach helps you stay motivated AND make consistent progress.

For example, if a target goal is to save $1,000 for your volunteer trip in two years, then set smaller goals that make this big goal more manageable and maybe a little less overwhelming.

Here’s what those smaller goals might look like:

Smaller Goal 1: Earn $25 extra per month babysitting by January 1, 2022
Smaller Goal 2: Open a savings account to store my savings by June 1, 2021

Also, make sure your goals are visible by putting them up somewhere in your room. Take time to visualize both achieving them every day and how your Future Self will feel as a result.

Did you know that Lady Gaga, before she became a celebrity singer, would visualize what she wanted to accomplish? She would say to herself, “I’m going to make a number one record and the number one hit.” Before fame, Will Smith always visualized himself becoming an A-list Hollywood superstar.

We’d say this approach works! Overall, setting and visualizing S.M.A.R.T. goals not only help you take financial action for your future but also make you more apt to reach them.

Hint: The plan for your future might change over time, and that’s okay! Simply create new goals, and roll over any money you already have to help achieve them.

Set short-term AND long-term financial goals.

A cool thing about the above steps? You can take the S.M.A.R.T. approach with any goals – both short-term and long-term.

Just be sure to balance short-term financial goals (e.g. saving for a smartphone) with long-term financial goals so your Future Self is prepared for the years ahead. No time machine required. 😉