FMS – Part 2 – Goal Setting

Welcome to Part 2 – Goal Setting of the Foundational Money Series (FMS).  If you haven’t yet read Part 1 – Net Worth Statement, you may want to do so before reading this article.  

The first part of the Foundational Money Series is about knowing where your starting point is.  Part 2 is deciding where you are going.  Referring back to the vacation analogy from Part 1, hopefully, by now you have figured out where you are starting from. Now is the time to think about where you want to go next.  

Your starting point matters, where you go may differ if you are starting in Edmonton or Toronto. Just like no 2 vacations are identical, no two financial journeys are the same.

Why set goals

Setting goals can help with achievement and motivation.  Goals provide direction and focus on your tasks.  Financial goal setting can help you decide where you want your money to go.

Having clearly defined financial goals can help prevent money from disappearing.  Your money now has something to work towards.

How to set goals 

One of the first steps in goal setting is to decide what you want to achieve.  Do you want to increase your net worth? Fully fund an emergency fund? Pay off credit card debt? Increase your savings rate?  Save for a new home?

Deciding what you want to achieve is the easy part.  Deciding on and stating why that goal is important to you is the next step. The why of your goal will be what helps to keep you motivated through the journey towards your goal.  

If a friend asked you to go to Europe next week you may be inclined to say no.  But if that same friend asked you to go to Europe next week to be in their wedding party you may be more likely to say yes (maybe).  This is because the purpose behind the trip is different in both cases.  The purpose is the why.

Many people can have the same goal but the why of the goal is usually very personal.  For example, my goal is to increase my net worth towards a certain number.  That’s the what aspect of my goal.  

Why am I focusing on that certain net worth?  Because it is a number in which a modest return will provide my family with enough income so that my husband and I can choose to work or not.  Achieving that goal will mean we can choose to stay home with our little ones.  My husband can choose not to work night shifts anymore.  Essentially our goal represents choice and time freedom.  That is our why.

Time freedom is something that will keep us motivated throughout the hard times.  Net worth is just a number.  The possibilities of what we can do with time freedom are endless.

The ultimate guide to SMART financial goal setting. Includes examples of short term, intermediate term and long term goals as well as tips for reaching your goals.  #goalsetting #personalfinance #handfulofthoughts


One of the most common goal setting techniques is setting SMART goals.  SMART goals are those that are specific, measurable, achievable, realistic and timely.  


Specifically refers to being able to pinpoint something.  The goal of “I want to increase my net worth” is vague and not very specific.  A more specific goal would be “I want to increase my net worth by $100,000 in the next 10 years.”


Measurable goals are those that are quantifiable and objective in some way.  The goal of “I want to decrease my debt” could be measurable if in fact, we knew the starting point of what the debt was.  

If you didn’t know the starting point then how would you ever know if the debt level is changing?  A more measurable goal would be “to decrease my debt by $12,000 in the next year by putting $500 towards it every paycheque.”


Achievable goals will help with motivation.  If your current net worth is -$200,000 then a goal of “I want to increase my net worth to $3,000,000 by next year” may not be achievable.  

Losing interest in unachievable goals is very common.  It is like running a race and never being able to see the finish line.  A more achievable goal may be “to increase my net worth by $10,000 this year.” 


Realistic goals are based on current conditions and realities. They provide a slight stretch from where you currently are in order to give you something to work towards. 

Ask yourself, is your goal within reach?


Timely goals have some form of time element.  Adding a time component to goals also helps with motivation to achieve the goals. Having a variety of short term and long-term goals is a good idea.  

As you achieve some of your short-term goals it will help you stay motivated for the longer-term ones.  “I want to increase my net worth by $100,000” is not a timely goal.  A better option would be “I want to increase my net worth by $100,000 in the next 10 years”.

Short Term Goal Setting

Short term goals are ones you can achieve in the near future.  This could be the next day, week, month or even year from now.  

Short term goals are ones that you can visualize yourself achieving soon. A benefit of these goals is that achieving them will help you stay motivated towards the longer-term goals.

Examples of short-term financial goals may be related to paying off credit card debt, creating a budget or funding an emergency fund.

Here are some examples of SMART short-term goals:

  • Pay off $1000 on my Scotiabank Visa by the end of the year
  • Record all my expenses and income for the past 3 months
  • Save $6000 in the next 12 months and put it into a high-interest savings account as my emergency fund

Intermediate-Term Goal Setting

Intermediate goals usually have longer time frames then short-term goals.  Achieving an intermediate goal may consist of first achieving a series of short-term goals.  Intermediate goals may be achieved in months or years from now.

Examples of intermediate-term financial goals may be related to creating a will, paying off loans, or saving for a large purchase such as a down payment on a home.

Here are some examples of SMART intermediate-term goals:

  • With the assistance of a lawyer create a will by the end of the next quarter
  • Pay off $15,000 student loan in the next 5 years
  • Save $15,000 in the next 5 years to put towards a home down payment

Long Term Goal Setting

Long term goals are those in the distant future.  The longer time frame associated with long term goals can be years if not decades.  Breaking down long term goals into short term goals will help with achieving them.  

Examples of long-term financial goals may be related to paying off your mortgage or saving for retirement.

Here are some examples of SMART long-term goals:

  • Pay off $325,000 mortgage in the next 17 years
  • Save $1 million in the next 25 years, invest savings in broad-based index funds 

Plan Out Your Goal

Planning out goals involves breaking them down into smaller steps.  If you are planning on climbing a ladder the best way to do so is one rung at a time.  Breaking down goals into steps is creating one rung at a time.  The benefit of planning out a goal is that it will seem more achievable.

“There is only one way to eat an elephant: a bite at a time”

Desmond Tutu

Planning a goal gives you a blueprint for success.  One way to plan out a goal is to write down everything you would need to do in order to achieve that goal.  Once you have written down everything, and I mean everything, then you can order or prioritize the steps to success.

Sometimes long-term goals can be broken down into intermediate-term ones and then smaller term ones.  Think of it as a scaffolding effect.

Goal Plan Example

Here’s an example of a plan for the short-term goal of “paying off $1000 on my Scotiabank Visa by the end of the year.”  For this example, we are going to assume that it is February and there are 10 months remaining in the year.

In order to pay off $1000 in 10 months, I would need to come up with $100 each month to put towards the goal.  If I was paid semi-monthly this would mean if I put $50 each paycheque towards my goal I would achieve it.  Knowing that I can set up an automatic transfer from my account to my credit card the day after every paycheque for $50.

Next, I would have to evaluate my plan to make sure it was realistic.  Can I afford to put $50 each paycheque towards my credit card?  In doing so I would also need to not charge anything new to my credit card in order to pay it off.  If this is realistic for my situation, great!  Re-evaluation of the plan may need to happen if it’s not realistic.

I’ve decided my plan is realistic, now what?  Now I just implement the plan.  If I want to accelerate achieving my goal then I could also put any extra money I earn onto my credit card if I can afford it. This extra earned money may come from selling extra things I have in my house. Or it may come from picking up a side hustle or two.

Tips for Reaching Your Goals

You have come up with a goal with a strong why or purpose to it – great!  But there are going to be some hard times that come when trying to achieve your goal.  Knowing that in advance can help you prepare for the hard times. Having a goal that is slightly out of your reach right now can help motivate you to grow in order to achieve it.

Here are some other tips for reaching your goals:

  • Set SMART goals
  • Write your goals down – don’t just keep them in your head
  • Tell other people about your goals so they can help keep you accountable
  • Outline your WHY for each goal – make sure it means something to you
  • Create various short, intermediate and long-term goals – this will help in building success habits as you achieve one goal it can help you to stay motivated to achieve the next one
  • Celebrate the achievement of your goals
  • Set reminders – maybe it’s a pop up on your phone, maybe it’s a note on the refrigerator or bathroom mirror.  The reminder can be specific to your goal or could relate to the WHY of your goal.

Goals Aren’t Black and White

In my opinion, here’s the problem with goal setting, it leads to binary thinking.  Everything becomes black and white, you either achieved your goal or you didn’t.  It does not consider all of the progress you made in working towards your goal.

Going back to a previous example, if your goal was to increase your net worth by $100,000 in the next 10 years if you only increased it by $99,900 does that make you a failure? Maybe a failure at reaching that specific goal.  But don’t lose track of all the progress you made in order to increase your net worth by the amount you did.

Don’t get discouraged if you won’t reach your goals as originally intended.  Pursue your goals without abandon but not blindly. Circumstances change and it is okay if your goals do too.

Personal Goal Example

Personally, I try to avoid black and white goal setting.  I am a fairly intrinsically motivated individual so I like to set benchmarks to work towards.  That being said those benchmarks are flexible and change often.

For example, one of my benchmarks was to retire early (by the age of 40).  Our original plan was for me to retire and stay home with our little ones while my husband still worked as he was the primary breadwinner.

The goal to retire by 40 is specific, measurable, achievable, realistic and timely so therefore seems like a good goal.  I will however not achieve that goal now as our situation has changed.  Does that make me a failure?  Maybe.

As my benchmark is flexible it adapts as I gain more information.  We have now decided that my husband will retire early and stay at home with our little ones.  As a shift worker, he doesn’t want to work night shifts anymore.  I’m a teacher and will always going to have the same holiday schedule as our little ones as they grow up.

Does it mean I will have to work longer?  Absolutely. It also means a better quality of life for our family – which to me is way more important than attaining a binary goal that I set at some point in my life.

Going back to the original travel analogy, I know in what direction I’m headed, I just may not know exactly when I get there.  You could say I’m on more of a “fly by the seat of your pants vacation” instead of a completely planned itinerary.

Where do you want to go next? What are your financial goals?

2 thoughts on “FMS – Part 2 – Goal Setting”

  1. Great piece. Fully agree the more you understand your motivation, the higher the chance of success.
    I think a lot of people like nebulous goals as they are easier to wriggle out of – which is exactly the point! If you aren’t honest with yourself, the best plan in the world won’t work.

    1. You are so right Michelle, being honest with yourself is key to achieving your goals. I’m also a big fan of taking action. You can have all the goals in the world but if you are not taking action nothing will change.

      Once you’ve made your money goals the next step is taking action – that’s exactly what Part 3 of the Foundational Money Series talks about.

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