Advisors say a clear plan for short, mid, and long-term objectives is key to building wealth and managing spending in the current economy.
Financial advisors are urging households to adopt a structured approach to setting financial goals in 2024. The strategy involves defining clear short-, mid-, and long-term objectives, from building an emergency fund to planning for retirement. This structured planning is seen as critical for navigating economic uncertainty and making informed decisions about spending, saving, and investing.
Why a plan is critical now
Without clear goals, it's easy to overspend, under-save, or miss key financial opportunities. A formal plan acts as a roadmap, helping you stay on track and make decisions that align with your long-term aspirations.
"You have to plan early and figure out what's most important to you—maybe it's figuring out a budget or sending your kids to college,” says Noah Damsky, founder of Los Angeles-based Marina Wealth Advisors. "The earlier you get clear on these priorities, the earlier you can actually start planning for where you want to go—and the more likely it is that you'll succeed."
Impact on financial health
The main impact of setting goals is a shift from reactive spending to proactive wealth-building. A plan helps prioritize high-interest debt, build a safety net against unexpected expenses, and channel funds toward investments that grow over time. This structure reduces financial stress and increases the odds of achieving major milestones like homeownership and a comfortable retirement.
How to categorize your financial goals
| Goal Type | Timeframe | Common Examples |
|---|---|---|
| Short-Term | Within 1 year | Create a monthly budget, build an emergency fund, pay off credit card debt |
| Mid-Term | 3 to 5 years | Pay off student loans, save for a home down payment, buy a car with cash |
| Long-Term | 5+ years | Plan for retirement, pay off a mortgage, create an estate plan |
The push for structured goal-setting comes as many households navigate the end of pandemic-era savings and face higher costs for borrowing and daily life. Advisors note that while classic principles like the 50/30/20 budget rule are still useful, the "pay yourself first" method—automating savings before paying other bills—is proving more effective for sticking to a plan. The core idea is to make saving and investing non-negotiable parts of your monthly cash flow.
How to set your financial goals
Assess your starting point: Review your income, expenses, savings, and debt to get a clear picture of your current financial situation.
Define your goals with the SMART method: Make each goal Specific, Measurable, Achievable, Relevant, and Time-bound. For example, instead of "save more," use "save $500 per month for a $30,000 down payment in five years."
Prioritize your objectives: Rank goals by urgency. Building an emergency fund and paying off high-interest debt (like credit cards) should usually come before a stock portfolio.
- Create your financial plan:
- Budget: "There are so many tools online where you can link your bank account or credit card, and they'll show you roughly how you're spending your money," says Daniel Milks, founder of Woodmark Wealth Management.
- Emergency Fund: Aim for three to six months of essential living expenses in an accessible savings account.
- Debt Management: Choose a strategy like the "avalanche" (highest interest rate first) or "snowball" (smallest balance first) method.
- Automate and implement: Set up automatic transfers to your savings and investment accounts. This makes saving a habit and reduces the temptation to spend.
- Review and adjust regularly: "Your financial goals aren’t set in stone,” says Milks. Review your plan at least once a year or after major life events like a new job, marriage, or having children.
Setting financial goals is an ongoing process that requires discipline and flexibility. By understanding your finances, defining clear priorities, and creating a simple plan, you can build a stable foundation for the future. Automating your savings, managing debt wisely, and reviewing your progress annually are the most effective actions to take. As Damsky advises, "The most important step is to start. You can always refine your goals, but having a plan and keeping it in motion is what truly matters."
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