Do goals matter that much to financial planning?

Category: Financial Planning

A common question from clients pertains to the importance of setting goals in financial planning.

The answer is that goals play a pivotal role in financial planning.

Goals provide direction to financial planning.

Individuals and families need to establish precise financial objectives to determine their priorities and aspirations. These objectives may vary, from immediate ones, like settling credit card debts, to long-term ones, like setting aside money for a child’s education or retirement. An example of a long-term objective is for a family to save £50,000 within a decade for their child’s education fund.

Individuals who set financial goals are more likely to achieve financial success than those who do not set goals. Those who set financial goals also felt more financially secure, compared to only 29% of those who did not set goals.[1]

Goals motivate individuals to take action.

Goals can give people a sense of direction and purpose, which can be helpful when making financial decisions. Goals can help individuals overcome procrastination and indecisiveness. For instance, if someone sets a goal to pay off their credit card debt in the next six months, it provides them with a clear objective and a timeline, which can motivate them to take action towards achieving it.

Studies have shown that setting clear and challenging goals can improve motivation and performance. People who set specific goals tend to outperform those given vague or no goals. Additionally, receiving feedback on progress towards goals increases the likelihood of achieving them. For example, someone might aim to save £10,000 within two years for a down payment on a house. They could work with a financial planner to create a plan for achieving this goal, such as setting up a regular savings plan and tracking progress.[2]

Goals provide a benchmark for measuring progress.

Setting clear and attainable financial goals is crucial for progress tracking and necessary adjustments. This approach helps individuals to acknowledge their achievements and stay motivated to achieve their financial aspirations. For instance, an individual may aspire to save £500 every month for retirement. By monitoring their progress monthly, they can tweak their plan as required to meet their goal.

Keeping track of progress towards one’s goals can boost motivation and enhance satisfaction. Research shows that individuals who monitor their progress are more likely to successfully achieve their objectives than those who do not track their progress.[3]

How do I set goals?

Setting challenging goals can be a great source of motivation, but it’s important to avoid setting unrealistic goals that can ultimately lead to frustration and disappointment. To help with this, we’ve compiled some tips on how to set achievable and realistic goals.

  1. To set financial goals, it’s essential to understand your values and priorities. Consider what truly matters to you and your long-term aspirations. For instance, if education is a priority, a goal to save for your child’s college education may be appropriate. Alternatively, if travelling is crucial to you, a goal to save up for a trip abroad may be more fitting.
  2. When setting goals, it’s best to make them specific and measurable. Rather than a vague goal to “save money,” aim for an exact amount within a particular time frame, making it easier to track your progress and stay motivated.
  3. Your current financial situation should also be taken into account when setting goals. Be realistic about what you can achieve, given your income, expenses, and any debt you may have. For example, aiming to save £20,000 in a year may not be feasible if you make £30,000 annually and have significant debt.
  4. Breaking significant goals into smaller, more manageable steps can also be helpful. For example, if your goal is to pay off £10,000 in credit card debt, breaking it down into smaller monthly payments can make it less overwhelming.
  5. Lastly, be prepared to adjust your goals as needed. Life is unpredictable, and your financial situation may change unexpectedly. If you face an unexpected expense or lose your job, adjusting your goals or timeline may be necessary. Flexibility is critical to achieving financial success.

Setting goals is crucial as it gives direction, motivation, and a way to measure progress. Working with a financial planner to establish practical and attainable goals can significantly enhance one’s chances of achieving financial success.

If you’d like to discuss how we can help, book a free, no-obligation chat here




[1] Financial Planning Standards Board. (2012). Global Financial Planning Survey 2012. Retrieved from

[2] Locke, E. A., & Latham, G. P. (2002). Building a practically useful theory of goal setting and task motivation: A 35-year odyssey. American Psychologist, 57(9), 705-717. doi:10.1037/0003-066X.57.9.705

[3] American Psychological Association. (2014). Making progress towards important goals. Retrieved from


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