How Do I Set Financial Goals?
In previous articles, we’ve spoken about the benefits of saving money and growing your finances over time, but one point we’ve yet to touch on is this – Why should you? What’s the point in earning more and more money if you have no real idea of how you should spend it? Sometimes, this lack of direction can make it difficult to even save money in the first place and the whole process can start to seem pointless. This is where financial goals come in. They help us to attach a specific reward to certain saving and spending targets which can provide the proper direction and incentive needed to achieve them. Rather than aimlessly mismanaging your finances, you can focus on a real benefit in the near future and direct your energies towards it. It sounds great, but how does it work? How do you set financial goals and what examples can we focus on? How Do I Set Financial Goals?
Financial goals are easier to set than you may think. In essence, they just require a good mix of imagination, realistic thinking and hard work. Of course, due to the variety of needs and wants in the world, they tend to be quite personalised, but that doesn’t mean you can’t get some advice when starting out.
Here are a few good tips and tricks that can help you out even if they can’t give you all the answers.

How to Set Financial Goals?
Decide what you want out of life – Your first step is realising what matters to you. Is there a dream home that you’ve always wanted to live in? Or perhaps an enterprise that you’ve always wanted to start? Maybe you’re just interested in getting to a point in life where you are totally debt-free. Regardless of what it is, get a sheet of paper and write down all your most deep-seated wishes. (Also, try to make sure that they’re financial wishes. Maybe leave “I wish I could turn invisible” off the list) |
Inject a little bit of Realism – Now comes the hard part. You’ll need to go through your list and cross out things that just aren’t feasible. Do you want to save and set aside R20 000 in case of emergencies? Keep it on the list! Do you want to own your own luxury yacht by the end of the month? Probably scrap that one. |
Be Specific – Make sure that the goals you keep aren’t too vague. It doesn’t help if you write down “I want to own a house one day”. Be more accurate with your terminology. What kind of house do you want? Where will it be? When will you have it? |
Try using the SMART strategy – The SMART strategy involves creating goals that are Specific, Measurable, Attainable, Relevant and Timebound. There’s a lot of information here so we’ll go into more detail on this a little bit later. |
Start Budgeting – Once you know where you’re going, it’s time to work out how you’ll get there. Figure out how much money you’ll need to reach your goal in the allotted time and then create a budget that works for you. Sadly, the work doesn’t stop there. Once you’ve made your budget, you’ll have to stick to it if you want to be successful. It should be noted, however, that budgeting itself can be a financial goal if you just want to get your finances in order. |
Work out a Timeframe – Once again, there’s a real need to be specific when you create your goals. Give yourself a due date for each goal and make sure that you reach it. There is also a need for more realism here – If you earn R1000 a month, you probably shouldn’t give yourself the goal of saving R500 000 in half a year. |
As mentioned, when it comes to financial goals, there is a fairly famous method known as the SMART strategy which can help you along if you’re having trouble. Let’s take a look at this strategy now.
How do you Create a Smart Financial Goal?
The SMART system for setting financial goals provides you with 5 components that should be found in every goal you make. Simply follow the given framework and you should find yourself with some challenging, but manageable goals –
- Specific – Figure out exactly what your goal is and avoid any vague language.
- Measurable – Determine how much you want to save/spend overall as well as how much you want to save by specific periods, ie, a week, a month, etc. This will allow you to track your progress.
- Attainable – Make sure that this is something you can actually accomplish.
- Relevant – Ensure that the goal is something you really want/need.
- Timebound – Give yourself a deadline and be sure to make it.

Now that we understand the terminology, let’s look at two examples to really drive home the point.
Firstly, let’s look at a goal that lacks any features of the SMART strategy –
I want to save up a huge amount of money really quickly. |
As we can see, this is a pretty unrealistic wish with a lot of indistinct features. It also hasn’t given us much of a chance to track and time things.
Now, by way of contrast, let’s learn about a goal that features all of the SMART aspects. We’ll also throw in the abbreviations so that we can see where everything goes –
I want to save up and buy myself a new set of tires for my car (S). I will need R8 000 and I will get it by saving R2 000 per month (M). I can afford this as I have R12 000 as disposable income each month (A). I need the new tires as my old ones are almost unusable (R). I will reach my goal in 4 months (T). |
It’s not a short goal, but it’s definitely a SMART one.
What are the 3 Types of Financial Goals?
Depending on the scale of your goals, they will each fit into one of three categories, namely –
- Long-term Goals – These include your biggest goals that won’t be achieved for quite some time. Completely paying off your mortgage is probably the most common example of a long-term goal that most of us will encounter.
- Mid-term Goals – These are less extreme than other goals but still quite challenging in their own right. We would classify things like ‘paying off my student loans’ as an example of mid-term goals.
- Short-term Goals – These are our quick and easily-obtained goals (relatively speaking). They generally involve smaller purchases such as a new cell phone, or renovations around the house. That said, they can also include things which may provide a financial foothold when working towards larger goals, ie. You may consider proper budgeting, a short-term goal which can open the door for mid-term and long-term goals.
Let’s look at another example for each category to really get a feel for things.
What are 3 Examples of a Financial Goal?
- Going on a Vacation (short-term goal)
- Paying off your Car Loan (mid-term goal)
- Creating a sufficient Retirement Fund (long-term goal)
Obviously, there are many more examples that we could go through, but, as we can see, the larger and more expensive the goal becomes, the further down on the list it goes. It’s important that you properly identify which category your goal belongs in so that you can create an accurate time frame for its completion.
How Do I Save R100k in 3 Years?
If the information we’ve covered so far can tell us anything, it’s that the viability of your goal will depend heavily on your personal financial situation. As such, the goal of saving R100k in 3 years will only be attainable for certain individuals.
If, after doing some calculations, you believe that you could reasonably make this one of your goals, your best move would be to create a watertight budget and stick with it as closely as possible. It may involve cutting some frivolous purchases and a couple of other sacrifices here and there, but in time, you could reach your goal.

In Conclusion – How do I Set Financial Goals and What is the SMART method?
Nobody can set financial goals for you as they are highly personalised and based on your specific financial situation, that said, they are easily created by identifying the needs and wants in your life and then tempering them with a healthy dose of realism.
To create a rough list of financial goals, simply follow these steps –
- Create a list of all of your financial desires and wishes for the future. This list can include anything from buying some new clothes to purchasing a mansion.
- Once you’ve got your list, read through it and remove the things that just aren’t feasible. For instance, wanting to be the richest person on the planet is a nice wish, but it’s not very likely.
- Be specific with your goals and avoid using vague language and ideas. Identify exactly what you want and how much it will cost you.
- Create a budget that you can follow. You’ll need to figure out how you can save money and how much you’ll need to save by certain due dates.
- Make sure that there is a specific date by which your goal must be accomplished. Track your progress and make sure that you reach your target on time.
Another famous method is the SMART strategy which involves coming up with goals that each possess 5 important traits, these traits are –
- Specific
- Measurable
- Attainable
- Relevant
- Timebound
It’s also a good idea to split your goals up into 3 categories so that you can give them accurate time frames for completion. These categories are short-term, mid-term and long-term.
Larger and more expensive goals are usually relegated to the long-term category while fairly affordable and easily obtainable goals are grouped in the short term. Everything else should be identified as a mid-term goal.
Disclaimer Finance101: All of our posts are for research purposes only. Finance 101 aims to assist its readers with useful information on the laws of our country that can guide you to make financial decisions that will enable you to become more financially independent in the future. Although our posts cite the constitution in many instances, they are intended to assist readers who are looking to expand their knowledge of the law & finance-related queries. Should you require specific legal/financial advice we advise you to get in touch with a qualified financial expert.
Found this article interesting? Leave us your thoughts below