Do you want to purchase a new home or make a dent in your debt but aren’t making any progress? These examples are common for many people in Singapore and around the world.

You may even be exhausting yourself with work and still have nothing to show for it. It gets worse if you have a bad credit score and is in debt. To counter that, you can apply for a bad credit loan to improve your financial health.

Here’s the deal: Wishing to put the downpayment for a home and to pay your debt are not financial goals.

That sounds ridiculous, right? After all, they’re things you want, and they relate to your finances.

Stay tuned because we’ll explain more below.

What Are Financial Goals?

Financial goals show what’s essential to you money-wise. They reflect where you want to put your money according to your values.

So these values could be related to other people, specific causes, things you want to have, or the lifestyle you want to lead. After having your emergency funds settled, you should set your financial goals.

We’ve started writing above some common examples of what people want to do with their money:

  • Put the downpayment for a new house
  • Get a new car
  • Pay off your debt
  • Go on an expensive overseas trip
  • Organise your wedding
  • Renovate your apartment
  • Start a new business

Here are the first ideas that you may notice:

  • Some of these wishes are on the long term, others on medium and short terms.
  • A short term financial goal may be to save up for an overseas trip, and a long term financial goal may be to purchase a house.
  • You’ll need more cash for some things and less for others; therefore, all of these desires require different strategies.

And here’s another thing:

All of the wishes above relate to things you want to spend money on – not something that brings you money. Few people say they want to:

  • Increase their financial literacy through personal researches or certain classes
  • Learn how to invest wisely
  • Double their passive income during the following year
  • Building an emergency fund

Also, why do we keep calling these wishes – which could be highly similar to yours – wishes, desires, and things instead of calling them “goals”?

In the introduction, we mentioned that wants related no financial matters don’t constitute financial goals.

So what exactly is a financial goal?

Financial goals reflect your wishes, but they’re backed by estimations and plans. They have to be realistic, and you have to be able to do them.

Of course, when talking with your friends, you can refer to purchasing a home as a goal.

But when you’re talking finances, you have to be more explicit than that.

How To Set A Financial Goal

We already discussed the first step of setting a financial goal, your wishes that stem from your values.

Here’s what you have to do next:


1. Prioritise Your Wishes

You want different things for the future – all of us do. For example, people planning a wedding may also wish to purchase a home soon or start thinking about children.

So, prioritise these wishes instead of starting to work on them chaotically. Write all of them down, assign numbers in the order of importance, and focus only on the goal at hand.

Pro tip: If two things are equally important to you, start working on the goal that’s in the shorter term.

2. Consider Your Budget

What does your budget have to do with your financial goals? After all, you can argue that everybody’s allowed to dream.

Here’s the thing: Your budget influences how big your dreams can be. It allows those dreams to come true, or it imprisons them in the Wishing Realm forever.

Making your budget is essential because you’ll know:

  • How much you’re earning
  • How much you afford to save
  • How much you can invest
  • How quickly you can achieve those goals

Here are the things you have to consider for your budget:

  • Your income
  • Your expenses
  • How much you can save

3. Set A Strategy

Another reason why making a budget is essential is because it tells you a ballpark deadline of when you’ll achieve your goal. For example, if you can save $1,000/month, you’ll need 50 months to save enough for a $50,000 wedding. That’s four years from now!

But what if you want to marry next year? You can find ways to increase your income or get a wedding loan to help!

So sometimes, your budget can give you an estimate of how long you’ll need to reach a specific financial goal.

But more frequently, you want to meet that goal in the timeframe you’ve selected.

In this case, you still want to consider your budget because it will dictate the best strategy. For example, if you’re going to get married within two years instead of four, you can:

  • Start cutting down on expenses: evaluate your monthly payments carefully to figure out your spending tendencies and what you can eliminate. We have an article that provides you with tips on how to save more money every month.
  • Start making more money: consider getting a new job or learn about passive income solutions and how to invest safely
  • Scale back your wedding: make a wedding budget first and see if you can get the wedding vibe you want, but with fewer expenses. For example, what about renting your wedding gowns instead of buying your own?
  • Consider a loan: research several licensed moneylenders in Singapore and banks before you decide on your best option

Your plan can be a mix of these strategies. We’ll discuss more below.

4. Make Sure Your Financial Goal Is SMART

The main difference between a wish and a financial goal is that the latter is SMART. SMART is an acronym for:

  • Specific
  • Measurable
  • Achievable
  • Realistic
  • Time-bound

To ensure your financial goal is SMART, you need to base it on the things we discussed above: your wishes, your budget, and your timeline.

Let’s see some examples:

  • I want to save $30,000 for a new car cash advance within three years.
  • I want to pay off my $10,000 debt within the year.
  • I want to invest $10,000/ year and obtain 5% returns per annum

So for the wedding example above, you’ll need a plan that mixes different strategies and entails several objectives.

For example:

  • I will cut back on X, Y, Z expenses to save $1,500/ month instead of $1,000/ month.
  • I will research several savings vs deposit accounts within the week to obtain the best rate.
  • I will learn how to increase my income within the month. Options to explore include:
    • Investment portfolio (government bonds, stocks, ETFs)
    • Renting a room in my apartment
    • Start selling my artwork (beads, paintings)

After doing this research, you can set a more specific financial goal, such as putting aside $25,000 year from separate objectives:

  • Selling your artwork for $500/ month
  • Saving $2,000/ month
  • Depositing $1,000/ month in a high-yield account
  • Investing $1,000/ month

Here’s another example:

Goal: Pay off $10,000 credit card debt within the year

Strategy and goals:

1. List all my debts from the lowest to the highest on Monday.

2. Make my budget (income, expenses, and savings) on Tuesday. See how much I can save.

3. Consider alternate ways of increasing my savings on Wednesday. Options to explore:

    • Start tutoring 2 hours/ day to obtain $800/ month.
    • Give up memberships I’m not using to save $500/ month.

4. Continue repaying the minimum amount to these cards/ month.

5. Put up my $1,500 savings towards the lowest debt to pay it first.

6. Move on to the second largest debt.

Pro tip: This strategy of paying the smallest debt first is called the debt snowball method. You can also consider the debt avalanche strategy, which entails paying the highest-interest debt first before moving on to the second-highest interest loan and so forth.

Warning: The two plans above rely highly on your ability to save money. However, many people cannot do that.

In this case, you can still meet your financial goal by starting early. As they always say, better late than never!

Should you be caught in a financial emergency, you can apply for the fastest personal loan with U Credit to help yourself. We are a very reliable licensed moneylender in Singapore with a very positive track record (4.9 stars Google Review).