How to set realistic financial goals at every stage of life

Setting goals has been shown to encourage more decisive action and increase successful outcomes in many areas.

Indeed, according to Psychology Today, goal-setting has been linked to self-confidence, motivation, and autonomy. Additionally, a study found that people who set and write down clear goals are 33% more likely to achieve their aims than those who formulate outcomes in their heads.

Setting goals is especially important when managing your wealth. A study from the University of Stirling found that households with clear targets were more likely to take risks with investing, meaning they may generate a higher long-term return.

The researchers also found that households with four or more savings goals owned twice as many stocks and shares as those with no defined targets.

That’s why it’s important that you set clear financial goals, but this can be challenging. It’s good to be ambitious, yet if you overreach too much, you may struggle to achieve your aims.

Additionally, your priorities are likely to change depending on your age, career status, and family situation. As such, you may need to adjust your aims from time to time.

Read on to learn how to set realistic financial goals at every stage of life.

Consider your personal priorities in life when setting goals

Most people have similar goals such as paying off debt or saving for retirement. However, to set specific targets, it may be useful to think about your personal priorities in life.

Do you value time with family above all else? Perhaps you want to start a business one day or travel the world?

When you consider your priorities and passions, you can build a clear picture of what you want to achieve. You can then consider the financial milestones you need to reach to get there.

For example, if you want to start a business, you can create a plan and calculate how much capital you need to get it off the ground and attract investors. This then gives you a clear savings goal to aim for over the next few years.

Starting with your personal priorities ensures that every goal you set helps you work towards your ideal lifestyle.

Try to create achievable and measurable financial aims

Being ambitious and working towards your passions is important but your aims need to be achievable at your current stage of life.

For example, if you plan to use your full ISA allowance every year when you’re in your 20s and your earnings are limited, you might struggle. Yet, later in life, when you have progressed in your career and your income might be higher, this may be a more achievable goal.

Unrealistic goals can harm your motivation as you’re constantly falling short of them, so it’s important to choose targets you can feasibly reach.

You can also improve your motivation by setting measurable goals, so you can track your progress. For instance, you might set a total savings target rather than simply aiming to save a certain amount each month.

Try to manage debt and build good financial habits early in your career

When you’re in your 20s and 30s and starting a career, your earning potential may be more limited than it will later down the line. As such, you might not be able to contribute a lot to your retirement savings.

Additionally, you may be more likely to have debts from credit cards, purchasing a car, student loans, or a mortgage.

At this stage of life, you may want to focus on managing debts and building good financial habits. You may also pay into a workplace pension, so you can begin building your retirement savings.

Common goals at this stage of life include:

Paying off credit cards and loans
Saving an emergency fund
Starting an investment portfolio.

While you may not be able to afford to max out your ISA every year or increase your pension contributions at this point in your career, your goals will help you develop good financial behaviours.

This creates a solid foundation so, as you get older, you may find it easier to work towards your long-term goals and prepare for retirement.

Increase and protect your wealth during your career-building years

In your 30s and 40s, your income may increase as you progress in your career. Your lifestyle and priorities may change too if you start a family.

Your goals at this age might focus on helping you build wealth for retirement now that your earnings have increased. Additionally, you might want to save for your children to give them a head-start in life.

It’s also important that you secure your wealth by investing in protection and considering your estate plan.

You may set goals such as:

Increasing pension contributions
Paying into other savings and investments
Purchasing life insurance and income protection
Creating a will and Lasting Power of Attorney (LPA).

When setting goals at this stage of life, you may want to decide what your ideal retirement looks like and consider what you want to achieve when you finish working. These long-term aims will guide your short- to medium-term financial goals.

Finalise your retirement plans as your career comes to an end

Later in life, as you look ahead to the end of your career, it’s time to start securing your financial position and finalising your retirement plans.

Many people find that their outgoings decrease as their lifestyle changes and their children move out. As a result, you may find it easier to clear the remainder of your mortgage and maximise contributions to your retirement savings.

You’ll also need to consider how and when you want to retire, and how you will generate an income.

Common goals in your 50s and 60s include:

Meeting your final retirement savings goal
Paying off your mortgage
Financially supporting loved ones
Revisiting your estate plans.

If you’re unsure about the most suitable way for you to generate an income and achieve your dream retirement, you may benefit from working with a financial planner.

These common goals might be suitable for you but everybody’s situation is unique, so it’s important to create your own tailored financial plan with goals that are specific to you.

Get in touch

We are here to help you set realistic goals and find the best ways to achieve them.

Please contact us at hello@ardentuk.com or call 01904 655 330.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate planning, tax planning, Lasting Powers of Attorney, or will writing.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Workplace pensions are regulated by The Pension Regulator.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.