How to set (and reach!) your financial goals

IN A NUTSHELL If you want to win with money, don’t keep your savings and financial goals in your head. Put them on paper and tell a friend.

Reaching your financial goals doesn’t happen by luck. It happens when you are clear about what you want.

Research from the Dominican University found that people who wrote down their goals achieved far more than those who only thought about them.

Another study by the American Society for Training and Development showed how your chances improve as you take each of these steps:

Deciding when you’ll do it: 40%
Writing it down: 42%
Making a plan: 50%
Committing to someone: 65%
Having regular check-ins with an accountability partner: 95%

Before you set financial goals, you must understand what you spend your money on.

Look at the last three months of your bank statements and draw up a list of expenses to see where your money is going – you might be surprised. Maybe you spend the same amount on takeaways as on groceries! And do you really need a Netflix and Disney+ account?

Draw up a budget and allocate specific amounts to specific needs i.e. groceries, transport and electricity. This will enable you to see where you can free up money to save towards your goals.

You don’t need to reach all goals at once. They will change as your life changes — and that’s normal. What matters is that your goals are realistic.

Savings vs Financial goals
Savings goals are short- to medium-term targets you put money aside for. They usually involve a specific amount, a specific purpose, and a specific time frame. Financial goals are bigger, long-term plans about the life you want and your overall financial direction.

Types of savings and financial goals

Pay off debt

Start with paying off high-interest debts like store accounts, short-term loans and credit cards.

Short-term savings

Save for school uniforms, the December holiday or household items instead of borrowing or going into debt.

Retirement savings

Invest enough to retire comfortably at 65 (or earlier). Use this retirement calculator to understand how your contributions — and the age you plan to retire — affect your final income.

Emergency fund

Aim for at least three months of essential expenses. Use this simple formula:
(Net salary × 3) ÷ Monthly amount you can save = Months to reach your emergency fund.

Education for your children

Start small. Even a R100 investment a month grows over time.

Long-term savings

Invest money for a down payment on a car or a house.

Insurance for your family

Life, funeral, and disability cover help protect your loved ones if something happens to you.

Getting a qualification to grow your income

A qualification can lead to better-paying jobs. It’s a simple investment that boosts your earning power.

Starting a side-hustle or small business

A side-hustle gives you extra income and reduces your reliance on one salary. Over time, it can grow into a small business with more stability and opportunities.

How to reach your goals

Step 1

Write down your goal and what it costs in today’s rands.

Step 2

Choose a date for when you want to achieve it.

Step 3

Work out how much you need to save monthly. If the amount is too high, adjust the goal or the time frame. Use free budget apps and online savings calculators and retirement tools.

Step 4

Choose the right savings or investment product.

Step 5

Automate your debit order — consistency is everything.

Step 6

Pick a trusted friend or colleague as your accountability partner.

Nomnikelo explains….

Let’s look at an example: Ano dreams of taking her family on a trip to Durban.

Step 1: Ano writes in her notebook: “Take the family for a holiday to Durban.” She checks accommodation and fuel costs and determines she needs about R15 300 to reach this dream.

Step 2: Ano wants to reach this goal in a year and a half (18 months).

Step 3: She calculates: R15 300 / 18 months = R850 per month. She checks her budget and sees R850 is doable if she cuts a few nice-to-haves but not essentials (nails, streaming services).

Step 4: Ano chooses a money market account at her bank because:

It is separate from her everyday spending account
It earns better interest
She can still access it if there is a real emergency

Step 5: She sets up a debit order of R850 to go off on payday each month.

Step 6: Ano asks her colleague, Lerato, to be her accountability partner. Every three months, Ano sends Lerato a WhatsApp: “Holiday Fund Update: I’m now on R___.”

This keeps her motivated.

At the end of the year, Ano checks:

Has her salary increased?
Can she save more than R850, bringing the finish line closer?
Is her holiday fund target still correct?

After a year and a half, she reaches R15 300 (plus interest). Durban here we come!

Further reading
Budgeting 101: Needs vs Wants
Saving vs Investing
Set clear savings goals
Why should I budget?

Sources
Smart About Money: Watch: Setting savings and investment goals
Your Money Line: Top Examples of Achievable and Clear Financial Goals

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