Part of our Build your own financial plan series

Woman who has created a financial plan.

5 steps to setting your 2021 financial goals

What do you imagine for your future?

Do you want to buy a home with a yard for your dog? Be free of student loan debt? Put the brakes on your credit card habit?

To accomplish any of those things, you need financial goals. “Setting financial goals can help you prioritize,” Heather Winston, assistant director, retirement and income solutions, Principal®, says. “They’re a way of giving you a clear idea of why you’re saving your hard-earned money.”

Setting goals is one thing; 85% of people already have their sights set on doing everything from saving more for retirement to paying off student loans.1 But transforming those dreams into reality is another thing. We’ve got a five-step doable plan to help you achieve them. Use our fillable financial goals worksheet (PDF) as you work through it.

1. Give your money a “job.”

Think about your days at work. You have things you need to accomplish this week, and things you hope you can finish into the future. The same is true with financial goals. What kind of life do you want now? Later? That’s the job of your money to help you achieve.

One thing to remember is that “financial goals don’t have to be set in stone,” Winston says. “In fact, you’ll revise them throughout your life.”

2. Categorize each financial goal as short-, mid- or long-term.

Use this as your guide to help you complete your financial goals worksheet:

  • Short-term financial goals: six months to five years
  • Mid-term financial goals: five to 10 years
  • Long-term financial goals: more than 10 years

3. Set a target date for each financial goal.

Being specific helps, even if you adjust the date over time. If you have a toddler who will be heading to college in 2035, you have a target date for your college savings goal. Want to take a trip across Europe for your 10th wedding anniversary? You know what timeframe you're working toward. Add target dates to your financial goals worksheet (PDF).

4. Prioritize each financial goal: critical, need, or want.

It helps to prioritize, so if push comes to shove, you know what to fund first. Label each goal on your worksheet: critical, need, or want. Let’s say you have a short-term goal to build up your emergency fund, and it’s “critical.” But another short-term financial goal is to trade your car, which is running just fine—that's a “want.” If funds become tight one month, you know where to put your money.

Thumbnail of the financial goals worksheet.

Get started by completing our financial goals worksheet (PDF).

Financial goals

Basic life and money goals

  • Buy a home.
  • Remodel or repair your house.
  • Pay down debt, such as loans and credit cards.
  • Find a new job.
  • Buy a car.
  • Build an emergency fund.
  • Give annually to charity.
  • Set a career goal: start a new business, expand a current one.

Family-related goals

Retirement-related goals

  • Increase your 401(k) contributions to their max.
  • Retire from working full-time or retire early.
  • Move (lower cost of living, climate, closer to family).
  • Pay off your mortgage before you retire.

Top financial resolutions1

The number one goal for Gen Z and Millennials? Save more.

The number one goal for Baby Boomers? Reduce spending.

5. Know how much you have vs. what you still need to save.

Do you have money in a Roth IRA, 401(k) or 403(b), or IRA? If so, log those numbers on your worksheet toward a retirement-related goal. Note: Some goals may not have current savings. That’s OK. You have to start somewhere.

If you plan to buy a home in two years and you need $15,000 more for a down payment, divide that by 24 months. Then you know to save $625 more per month toward that goal.

Next steps:

2020 Holiday Shopping, Spending, and 2020 Outlook, Principal Well-Being IndexSM, November 2020.

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements. Insurance products and plan administrative services provided through Principal Life Insurance Co., a member of the Principal Financial Group®, Des Moines, IA 50392. 

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