Why You Need Savings and Investment Goals

Why you need savings and investment goals

For many years my financial situation was a struggle. Living paycheque to paycheque, maxing out credit cards, having no real direction, basically a financial mess. I also had an issue of being too smart for my own good and not really listening to wiser heads. My mother is an amazing saver and budgeter. She grew up in challenging circumstances and was a master at stretching the single household income a long way. No one knew the various super market specials like she did! 

It took a long, long time (in spite of my mother’s teachings) for the penny to drop for me and in the mean time I’d squandered thousands and thousands on worthless products, bad investments, fees and charges, you name it, I did it. Meanwhile friends and acquaintances were making house purchases and other quality investments, basically being savvy with their money whilst I was wallowing in self inflicted financial misery.

For some of us we get a financial wake up call when we move in with someone or get engaged/married or when a baby is on the way. For me, I was sick of living pay check to pay check, I wanted more and I wanted to live life on my terms. I needed to take control of my finances and began to set savings and financial goals. I actually took time out to plan out what I wanted to achieve both in the short term and long and serious planning went into this exercise.

The desire to be better financially finally overtook the desire to be financially wasteful; the journey to financial prosperity had begun.

Why you need to set financial goals

To me (and I’m sure quite a few others) having goals gave focus and direction, it enabled me to strive for something, to be better with my time and resources. My finances weren’t great for a long time one of the main reasons was lack of direct and not setting goals.

My journey back to financial respectability also didn’t happen overnight and there was no magic pill.  Setting challenging goals helped as did regularly checking in with these goals, staying focused and accountable then setting new more challenging goals once the previous ones were achieved all helped my moving forward financially.

Now for some of you when you meet a partner you tend to find a joint financial purpose usually revolving around setting financial goals around travelling together, getting your own place and/or starting a family. So assess your current financial situation and if you aren’t happy with where you are at look to see whether you have any planning or structure to this and whether you have set any financial goals. If so, are these goals easy to achieve and not getting you to push yourself?

How to set financial goals

            Where are you now?

To me I needed to know where I currently was, even though my financial situation was horrible. I needed to know every amount of debt I owed to the last dollar. I needed to calculate my current financial obligations and to determine what expenses I needed to get rid of and which expenses needed to be negotiated.

So the question I would be asking myself is where are you now? Get a list of all of your debts, outlined your expenses for the last month-three months then make a new budget of what you will be spending going forward. The worse your situation the leaner your budget should be. Remember it isn’t forever however the harder the cut and the quicker this is done, the quicker you will be on track financially. Alternatively the quicker you can increase your household income the lesser the budget cut needs to be.

            Where do you want to be?

Have you given much thought to what your financial success story would be? Where would you be living, would you be travelling, what investments would you have, what would a typical day involve for you if you were financially independent and debt free?

Set aside a few hours and map out what financial independence is to you, how much income your investments need to provide to enable this. What type of investments do you have? Are you working at all, if so what business are you in? Write down all your long time financial goals.

Once you’ve got your long term goals look at shorter term goals, goals that also fit in with your long term goals. Some shorter term goals could include paying down a credit card or setting a 3 month savings goal then expand.

            What is your current budget and what changes need to be made?

Now you know where you want to go financially long term, let’s start the journey.

For those not in the best situation financially, one of the hardest things you can do is reviewing your budget and making a new one. For those with a mortgage has this been review recently? What about your other personal loans or credit cards? Have these been reviewed recently? Does your current income allow a change in lender, one that provides repayment options? For those with credit card debt and sufficient equity and income, can your credit card debt be absorbed into your current home loan?

What ‘luxuries’ do you spend your money on, ones that can be cut out whilst you are rebuilding your finances. Once you’ve gone through your recent expenditure now it’s time to create your new lean budget. Here is a link to a budget template if you need a hand with this.

Google Sheets Budget Template

Financial hub, emergency fund and beyond

After creating your new monthly budget (taking into account debt repayments as well as future expenses you’ll need to plan for), hopefully there is now a surplus, but what to do with this surplus? Let’s focus on building up your emergency fund.

For me, one thing that really helped me get back on track (aside from setting financial goals) was to set up my own version of a financial hub, where I set up a transactional bank account (where most expenses are paid automatically via direct debit) and a specific savings account (where any surplus is automatically transferred to from the transactional account).

Automated Financial Hub


For me my first goal was 3 months monthly basic expenses (shelter, food, utilities) then my major goal was 12 months of my current lifestyle expenses (basic expenses plus some frills such as gym membership, streaming services, etc.)

Investing your way to financial independence

 Once you’ve hit your savings targets and are ready to invest, the same principle of financial goal setting should apply here. What is your ideal financial indolence (i.e. how much income does your investments need to provide to enable you to fund your current lifestyle)? Once you’ve planned this out then you can look to building several stable enough income streams to fund this financial independence.
We’ve written about introduction to investing here so if you want further information regarding this go to that article however the main points of that article are looking knowing your risk profile, your investment time frame and finding quality investments.

Other Basic Financial Tips

Check in with your financial goals regularly

I check in fortnightly however I was looking at this daily when I first set up my financial goals and initial budget. I wanted to make sure that my debit transactions were being paid as they should be and that my transaction account had enough money in it whilst I was setting up my financial hub. After the first two months worked well I went to a fortnightly review of my finances which works well for me.

You also want to make sure that you haven’t set financial goals that are too hard (or too easy) to achieve. If you have over (or under) calculated your savings ability or regular expenses quickly make the necessary adjustments and keep on your new path.

Eliminate the use of your credit card or if your finances are in a bad way or even cut up your credit card

For me I use a debit card and never use a credit card. I do have a credit card and would probably only use this when travelling (in case my financial details are compromised and it’s easier to get back fraudulent payments via a credit card rather than your own bank account). As I have budgeted my expenses I am comfortable to use my debit card to pay for my non regular expenses such as the weekly grocery shop. Most other expenses are set up as a monthly or quarterly debit from my transaction account or the debit card linked to this account.

Use the 24 hour rule for larger expenses

Once in a while you might come across something that you feel that you need or really want that is outside your budget and you may fall foul of an impulsive buy. If this is you, give yourself 24 hours to think if you really need this purchase. If you feel the same way in 24 hours later (and the purchases doesn’t really affect your financial and savings goals) then make that purchase. In most cases you’ll find you don’t really need (or want) that purchase and after 24 hours the impulse usually goes away.

Review your total finances and hub each year

The running of your automated financial hub should have a basic review every week or fortnight with a more in-depth follow up every quarter. Regular large expenses such as your mortgage or rent (if applicable), any other loans, utilities, credit card (if applicable) should be reviewed bi annually or annually. There may be better deals available or better investments out there, so review your total finances each year and make any necessary changes that will help you get to your financial goals quicker.

An in depth deep dive on your investment portfolio should be made every 6 or 12 months while a monthly check in is also advised.

There are many ways to improve your financial situation or to get it back on track, for me setting savings and financial goals help speed up my journey. Setting challenging goals, regularly checking in to monitor progress, reaching out for help for people who had achieved what I was looking to achieve, putting in the research and most importantly being consistent each day and not giving up in the face of a setback or two were all a factor in my financial comeback.

We all want to be financially on track and this can be achieved no matter where you are starting from. Of course setting financial goals, living within a budget are all great however to make serious progress with your financial situation is to increase your household income as we have discussed previously. Increased income with a disciplined savings and investing approach will supercharge your journey to financial prosperity.