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4 Questions you Must ask When Setting Financial Goals

Chris Gottschalk

Chris Gottschalk About The Author

Jul 25, 2023 4:30:00 AM

On the surface, setting personal financial goals seems easy. All you have to do is think about what goals you’d like to work toward to get the future you desire. In practice, though, it’s easy to be overwhelmed by the number of goals you might think up and be left wondering which goals you should prioritize.

If you’re nodding your head in recognition, don’t worry. There are some questions you can ask yourself while you’re prioritizing your financial goals that will help you figure out which ones are most important.

What questions should I ask to set good financial goals?


questions to ask when setting goals

Is This Goal Essential?

This should be the first question you ask about any financial goal you’re considering. Not every goal has to improve your personal finances, but you should prioritize those that are over those that aren’t, especially if you’re just starting to set specific financial goals. Examples of essential financial goals include:

  • Creating a monthly spending plan
  • Building up an emergency fund
  • Getting out of debt, including student loans
  • Buying a reliable car
  • Paying for your child's college education
  • Saving for your retirement
  • Improving your credit score
  • Buying health insurance

Of course, there’s nothing stopping you from saving for other financial goals that might be more fun while you’re also setting money aside for these essential goals. However, if you have to choose between an essential financial goal and one that’s more of a “nice to have,” choose the essential financial goal first.

Why should I prioritize essential financial goals?

Prioritizing essential financial goals is important because these goals directly impact your financial health and financial security. They ensure that you'll always have enough money for regular expenses like rent and mortgage payments, groceries and utilities, while protecting you from unexpected expenses. By prioritizing these financial goals, you are taking proactive steps towards securing your financial future.

As an added bonus, once you've reached these financial goals, you'll have an easier time reaching those "nice to have" goals. You might have more money in your monthly budget once you get debt free, for instance, and an emergency fund means that an unexpected expense won't completely derail your financial plans.

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What do I Value the Most?

Once you have your essential goals taken care of, you’ll need to think about what you value most. This doesn’t have to be a deep dive into your ultimate life goals (that comes later), but it does mean you should think about what is most important to you at this point in your life.

For instance, let’s say you have your essential goals squared away, and now you’re wondering whether to buy a new car, remodel your kitchen or get season tickets to the Minnesota Vikings, because this year is their year. Each of these goals is attractive, but you definitely don’t have the money for all of them this year. Which goal should you choose?

This is where your values come in. You might feel that remodeling your kitchen is more important, since it’s a bigger goal and you’ll enjoy the benefits of the remodel for years to come. However, you might instead feel that a new car is more valuable if you’ve got a new job that involves driving more, or you might have always wanted to have season tickets to the Vikings, and you can finally afford the cost.

Here’s the important thing to remember, though—none of these choices are wrong. Even a goal like season tickets that might seem frivolous can be deeply fulfilling. Remember, you’re making a decision based on your values and no one else’s.


what to ask when setting goals?

What can I Realistically Achieve?

If you’re making your financial goals SMART, part of the process involves making sure your goal is realistic. In other words, is reaching your goal actually possible?

The sad truth is that many people, maybe even most people, have dreams that they simply can’t achieve right now. If you’ve dreamed about buying a beach house but you’re currently working a minimum wage job, for instance, you’re probably aware that goal isn’t realistic at this point in time.

Sometimes, though, figuring out whether your goal is realistic or not isn’t quite as clear. Perhaps you’d like to vacation for a week in Hawaii, which you know will be expensive, but you have a job that pays $60,000 a year so you shouldn’t have a problem setting aside money for that goal. On the other hand, you’re making payments on a personal line of credit you took out to remodel your home and you also took some money from your savings account to pay for a new set of tires, so do you have the financial resources to save for this vacation goal right now?

How to figure out what goals are realistic

If you're trying to figure out what goals are realistic, your first step should be to look at your monthly spending plan, a.k.a. a budget. This is a great way to see how much money you have available to put towards a financial goal.

If you do have some money available to put towards your financial goal, you can take advantage of the SMART goal strategy. SMART is an acronym that means your goals should be:

  • Specific
  • Measurable
  • Attainable
  • Realistic
  • Time-Bound

Since you know how much money you can put towards you goal each month, all you have to do is figure out how much a vacation to Hawaii would cost and you'll be able to figure out how long you'd need to save. From there, you can determine if the vacation you want to take is a good goal.

You might discover that saving for a trip to Hawaii is actually pretty doable. On the other hand, you might realize that you should concentrate on other goals first before saving for a vacation, and instead put your extra money toward goals that will improve your financial stability, like rebuilding your savings and paying down your line of credit.

What do I Want my Future to Look Like?

This is the final question you need to ask yourself, and it’s okay if you need to take some time to come up with an answer. Even thinking five years ahead can seem like a nebulous goal as opposed to the concerns of the here and now.

Having said that, knowing what you want to achieve in five, ten and even twenty years is a must when setting personal financial goals. Not just because you’ll be able to use this information to set long-term financial goals, but you can use that information to choose which short-term and medium-term financial goals you’d like to pursue.

What are some good financial goals to set for the long-term?

Some good financial goals to set for the long-term include saving for retirement, paying off debt, building an emergency fund, investing in real estate or stocks, and starting a business. It's important to set specific goals that are achievable and align with your financial priorities.

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Achieve Your Personal Financial Goals With First Alliance Credit Union

Sometimes figuring out which personal financial goals you should pursue is easy. Other times, though, you might not know which goals you should prioritize. However, if you just ask yourself which goals are essential, what your values are and what you can realistically achieve, you’ll have a clearer picture of which goals you’ll want to focus on.

If you’d like help reaching your financial goals, become a member of First Alliance Credit Union today and take advantage of our services. Once you have your goals set, you can start saving money in our traditional savings account, put money in a CD to get a better interest rate, and keep track of how close you are to your goal with our online banking platform and mobile app.

We do our best to provide helpful information but we cannot guarantee the accuracy or completeness of the information presented in the article, under no circumstance does the information provided constitute legal advice. You are responsible for independently verifying the information if you intend to use it in any way. Additionally, the content is not intended to be reflective of First Alliance Credit Union’s products or services, for accurate and complete details about our product and service information you must speak to an advisor at First Alliance Credit Union.