70% of Americans set financial goals. Here’s how to join them

Be happier. Exercise more. Get promoted. We’re all pretty familiar with setting (and hopefully achieving) big, broad life goals. In fact, about 70% of Americans set an objective they’ve got for their lives. That includes financial aims: About the same number of people are likely to set financial goals.

A financial goal is like any other milestone you want to achieve: It’s typically specific and has a timeframe. But how do you prioritize when you have limited resources, lots of dreams, and only a vague idea of what the future might hold? These steps can help.

Hopes and dreams are just that: lofty ideas that may be fuzzy on the how-tos and dates. But when it comes to financial goals, the big picture matters. They’re about the kind of life you want now—and in five, 10, or 20 years.

Your big-picture goal may be paying off a credit card. Someone else’s might be to own a second home. There’s no set list and certainly no judgement for the types of goals that help you imagine your future financial life, whether it be free of debt or a view of the ocean.

Those big-picture dreams may enable you to get more specific with your financial goals. If possible, add some ideas that help your financial goals take shape. Here’s an example: Maybe your big-picture goal is to live debt free. Your specific goals, then, may be to pay off a credit card and perhaps a student loan.

Push yourself, knowing that you can adapt here, too. “Setting distinct financial goals may help you prioritize,” says Heather Winston, director of individual solutions at Principal^®. “They’re a way of giving you a clear idea of why you’re saving your hard-earned money.”

Next, break your financial goals into three buckets: short-term, mid-term, and long-term. Short-term are from six months to five years, mid-term are from five to 10 years, and long-term are more than 10 years in the future.

Within those buckets, set a target date for your financial goals. For some goals, that might be easier than you think. Say you have a toddler who may go to college in 2038. That’s your target date for your college savings goal.

Look for ways to work in reverse. For example, if you are 30 and would like to retire at age 62, you can work backward from that, setting savings targets for each year. And, if you have to or want to adjust that end-working date, you can do that, too.

Not all goals are created the same. Now that you have the big picture, specifics, and a timeframe, it’s time to prioritize into critical, needs, and wants so that you can focus when goals end up competing.

Let’s say that you have two short-term savings goals: build up your emergency fund and save for a vacation. Not having an emergency fund could negatively impact your financial future: If a dishwasher breaks, for example, and you have to put the cost of a new one on a credit card, that may derail other savings plans. It’s critical. Saving for the vacation? It’s a nice-to-have, not a need-to-have, so it’s a want.

Classifying your goals that way helps you to allocate your available funds and also enables you to adapt. If you don’t have enough to put toward both one month, it helps to have the decision made for you.

Have you ever heard of “couch to 5K” running plans? The idea is to give a step-by-step way for someone to go from a non-exerciser to finishing a 5K run. This whole financial goals exercise is the equivalent of a couch to 5K.

You may not have begun saving for some goals. That’s OK: The important thing is to just start. For example, if you plan to buy a home in two years and you need $15,000 for a down payment, divide that by 24 months. Then you know to save $625 more per month toward that goal.

If you’re already saving for some of your financial goals, you’re up off the couch and the time to reach your finish line may be shorter than you might think. Now, your job is layer in your budget, adjust, and keep moving forward.