annual financial planning

Annual financial review: How to set (and actually achieve) financial goals

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I’m a huge nerd – and if you didn’t already know, financial planning and financial goals are one of my passions. I am especially excited when I see that we’re moving closer to a key goal we’ve set! So much of the time people push finances under the rug because there are big (and sometimes scary) issues we’d rather not deal with. I’m here to tell you right now – pushing things under the rug won’t fix your problems, and you’ll never feel anything other than dread or anxiety when looking at bills and bank accounts. As we’re ending the year, it’s a great time to take a look at your financial health, and set goals for the year ahead.

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We set a budget and financial goals every year to ensure we're on track with our finances and spending. There are a few easy ways to set yourself up for success with both your budget and goals - keeping you on track all year! Check out the strategies we use to finally achieve big financial milestones.


If you’re one of the many people who stress about money, there is one very easy thing you can do to take control of your finances, and you don’t need to be a millionaire to do it! Creating annual financial goals not only helps you make progress toward getting out of debt, creating an emergency fund, or saving for college but also shows you where you’re spending most of your money – and ultimately where you can look for savings.  I’ve outlined just five easy steps to setting financial goals, so if you’re ready to take control of your money keep on reading.

Ok friends, some of you have asked for my “Mamma’s List” up front – in case you don’t have time to get into the details of my posts.  I’m trying something new and providing my list up front, but feel free to keep reading (or pin for later) for the full deets! To create attainable and actionable financial goals, here’s what needs to happen:

  1. Find your “why” – what’s the big motivation that will help you achieve this dream?
  2. Define your goal. You’re 50% more likely to achieve it if you write it down
  3. Set a budget you can stick to (this is a biggie! subscribe to get my free template)
  4. Prioritize your goals first before any discretionary spending
  5. Hold yourself accountable & make it happen!

And down to the nitty gritty…

What is financial planning – and what are financial goals?

Well, I’m glad you asked. Financial planning has a few different definitions, and while I think the Wikipedia definition is fine “a financial plan is a comprehensive evaluation of an individual’s current pay and future financial state by using current known variables to predict future income, asset values and withdrawal plans,” — it is a little confusing for someone without a lot of financial background.

I think the CFP (Certified Financial Planner) Board defines it a little better. Their definition states that financial planning is “the process of determining whether and how an individual can meet life goals through the proper management of financial resources.”

Ok – so now you may be thinking, why do I need to do any financial planning? I’m doing just fine with what I have.

Related: How I save big on diapers, and you can too!

Why we all need financial goals

I’d like you to indulge me for a minute and do a little dreaming. What’s hanging out in the back of your mind as a big financial dream or maybe even a big fear? It’s that little voice in your head that won’t go away. Maybe it’s that you want to be able to fully pay off college tuition for you children, or you’d like to buy a house or go to Tahiti. Or maybe, you’re worried about more immediate needs like maxed out credit cards and being able to pay all your bills next month. Whatever your situation, we all have financial needs, and in order to take control of your money, you need financial goals.

The five steps to achieving your dreams

Achieving goals never comes without sacrifice. As you probably well know, if it was easy, everyone would do it. I’m not here to tell you that achieving your big goals and dreams will be a cakewalk, or we’d all be rich. However, with just a few simple steps, you too can take control of your finances and make your dreams a reality.

Find your Why

Find your why. You need a BIG motivator to help you achieve your goals. No one ever got out of debt just because they didn’t want the creditors to call anymore, and no one ever moved into a bigger house by just wishing for more space. You need to uncover your underlying motivation and why you really want to do something. For example, in the cases above, a “why” might be because you want to be more financially stable and provide for your family, or in the case of the house you’re planning on having children and you’ll need additional bedrooms.

Define your goals

The next part is the fun part (and can also be a little scary). What do you need or want to do? This can be anything from getting out of debt or creating an emergency fund to taking a European vacation or finding financial freedom so you can quit your job. There are a lot of goals out there and they vary in size. Take a hard look at your financial picture and create two or three goals that are really important to you, and then quantify them. You’re 50% more likely to achieve a goal if you write it down!

If you need to get out of debt, what’s the payoff amount on your credit cards? In order to create an emergency fund, how much do you need to cover six-eight months of expenses? If you’re going on vacation, do some research on airfare, hotels, and other expenses and set a budget. Some goals will naturally be bigger than others, and this will determine whether or not you’re contributing to multiple goals at the same time.

For instance, retirement is a financial goal that everyone should start working toward in their 20’s. I’ll be saving for retirement right up until the day I retire, but that doesn’t mean I can’t have a goal to go on vacation or to pay for college before that happens! You’ll need to categorize your goals into short and long-term to best set your budget. Ok, and now for the hard part.

Set a budget you can stick to

Yes, this is the complicated piece that seems to trip everyone up. Setting a budget to hit your goals is imperative. It’s probably the most important factor in determining whether or not you’ll hit the mark. And now I bet you’re thinking – this all sounds fantastic, but how do I know what my budget should be? This is where knowing your income and expenses is critical. This next step is the hardest, but is the most important.

You’ll need to write down all of your income and expenses, and see where you have the flexibility to allocate money toward your financial goals. Click the button below to download my free budget template to help with this part.

A quick tool we use for categorizing expenses is a software called Quicken. Although there is some categorization involved, it’s much easier than downloading all of our bank account statements and manually aggregating everything. The software basically attaches to your bank account and automatically categorizes each expense into bigger buckets. You can see trends over time as well as how much you spend in each area monthly. If you’re interested in the software, you can get it on Amazon!

After you understand where your money is going, you can work to cut expenses that aren’t 100% necessary. If you haven’t been tracking expenses, I bet you’ll easily find $50-100 that can be reallocated toward a financial goal. Whether you find $50 a month or $500 in your budget, the most important thing is that you commit a certain amount of money toward each goal. We have a monthly allocation, as well as an “outside” target. The additional outside target is what we know we need to hit our goal, but we can’t pay for out of our monthly budget due to other expenses. Outside monthly funds can come from an income tax return, overtime hours, any annual bonuses, or other jobs you do to bring in additional cash.

Put your goals first

Ok, you’ve done all the hard work – and now you just have to put your plan into action. This means you have to pay yourself first. The fastest way to derail achieving a financial goal is to have it be last on your priority list. At the beginning of the month, make that extra payment, or transfer the goal money into another account. You want it to be gone before you ever even think about spending it.

Paying your financial goals first forces you to spend within your means for the rest of the month, without dipping into whatever savings you’re working towards. If you’ve paid the goal first there isn’t a chance it will get left off the list when things get tight before the next paycheck. Finally, you need to hold yourself accountable.

Hold yourself accountable

For long term goals (retirement, college savings, etc.) it’s OK to check in on your goals annually. Have you hit your target? How far off are you, and where can you adjust?

For shorter term financial goals you may need to check in monthly, or even more frequently than that just to make sure you’re on track. If you miss a target don’t beat yourself up. Look at where the money went and decide if that expense was a want or a need. If it was a want, is it more important than your goal? Sometimes you’ll find that monthly budgets or savings goals need adjusted once you reassess. If a goal was too aggressive and you can’t afford groceries, something needs to change. Additionally, priorities change, and you may realize that while you thought that basement addition was necessary, you can make due just fine by adding twin beds in one of your existing bedrooms. The key is to continue to follow up on your goals and progress, and then celebrate once you’ve hit a key milestone!


Reevaluate, Rinse & Repeat

Once you’ve completed a year of financial goal planning and hit a key goal, it’s time to reevaluate and repeat for the next year!


Have any tips on how to keep your budget on track? Leave me a comment and let me know!


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  1. Setting financial goals with purpose tied to it helps you achieve financial freedom. Truly, at the end of each years, goals need to be reviewed and performance weighed to make the following year more better and efficient

  2. Perfect timing! My husband and I always sit down over Christmas break and dream about the following year! I want to find a way to not only write it down but keep it on display this next year to help the momentum!

    1. What a great idea! Definitely something you have to keep top of mind if it’s going to work. Good luck dreaming this year 🙂

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