Most people have financial goals. Few write them in a way they can reach.
“Save more” is a wish. A real goal has a number, a date and a monthly amount. Here is a five-step method.
What are the 5 steps to set financial goals?
- Make it specific. Say exactly what the money is for.
- Put a rand amount on it.
- Give it a date.
- Divide it by the months left. That is your monthly amount.
- Automate and track it. Use a debit order, and check once a month.
“I will save R3,600 by 31 December” is a goal. “Save more” is not.
What do financial goals look like?
| Goal type | Example |
|---|---|
| Safety | Emergency fund of R2,000 |
| Debt | Clear the R4,000 store account |
| Annual costs | School fees in January |
| Big purchase | A deposit for a car or a home |
| Long term | Start retirement or tax-free savings |
Start with one or two. Too many goals scatter your money.
How much do you need to save each month?
Divide the goal by the months left. Here is a hypothetical example.
| Goal | Months left | Save each month |
|---|---|---|
| R3,600 by December | 12 | R300 |
| R2,000 emergency fund by June | 5 | R400 |
| R6,000 school costs by January | 10 | R600 |
If the monthly amount is too high, extend the date, lower the target or find extra income.
A home deposit of R60,000 in five years is R1,000 a month. Seeing it in monthly terms shows whether it is realistic.
What order should you set financial goals in?
A common order works for most people:
- A starter emergency fund. See emergency fund.
- Costly debt. See debt consolidation.
- Predictable annual costs. See sinking funds.
- Longer-term goals, such as a deposit or retirement.
Which of your financial goals should come first?
Pick the goal that stops the most pain if you reach it. If one surprise sends you to a lender, the emergency fund comes first. If a store account costs 20% extra a year, clearing it can beat saving.
When two goals compete, give the urgent one most of the money and the other a small, steady amount, so neither stalls.
How do you keep going?
- Give each goal a name in your banking app, such as “School 2027”. Seeing it makes it harder to spend.
- Review once a month. Move the date or amount if life changes.
- Celebrate small wins, such as reaching the first R500.
What if you miss a month?
Add a little extra later, or move the date. A missed month is not a failure. Quitting is.
How do goals fit with your budget?
Every goal needs a line in your monthly budget. See how to budget and zero-based budgeting.
For long-term saving, SARS explains tax-free investments, where growth is free of tax within the annual limit.
What does a filled-in goal worksheet look like?
A worksheet turns a wish into a plan. Here are three hypothetical goals, filled in.
| Goal 1 | Goal 2 | Goal 3 | |
|---|---|---|---|
| What | Emergency fund | Clear the store account | School costs |
| Amount | R2,000 | R4,000 | R6,000 |
| Date | 30 June | 31 October | 15 January |
| Months left | 5 | 9 | 11 |
| Monthly amount | R400 | about R444 | about R545 |
| Where it is kept | A separate savings pocket | Debit order to the store | Pot named “School” |
| Why it matters | A surprise should not mean a loan | The account costs 24% a year | The January bill |
The three goals together need about R1,389 a month, which may be more than is available. That is the signal to rank them, or to extend a date.
The worksheet does not have to be perfect, but it forces you to see the monthly cost of what you want.
What if you can afford only R500 a month?
When money is tight, choose an order and stick to it. Here is how two plans compare for the goals above, with R500 a month.
| Plan | What happens |
|---|---|
| A: Emergency fund first | R2,000 takes 4 months. Then R500 goes to the store account, which takes 8 more months |
| B: Store account first | The R4,000 account is cleared in 8 months, but a surprise in that time may need a loan |
Plan A protects you from borrowing again while you pay down the debt, and it is usually the better start.
If the store account charges a lot of interest, a hybrid works: R300 to the fund and R200 to the account until the fund reaches R1,000, then switch. The right answer depends on how likely a surprise is and how costly the debt is.
Check your debt’s interest rate before you decide.
How do goals differ by time horizon?
The time you have decides where the money should live.
| Horizon | Examples | Where it is often kept |
|---|---|---|
| Under a year | Emergency fund, school costs | A separate savings account |
| 1 to 5 years | A car deposit, a home deposit | A savings or notice account, with low risk |
| Over 5 years | Retirement, long-term growth | Tax-free savings, a retirement annuity, with more risk |
Money you need soon should not sit in something that can lose value. Money you will not need for years can be invested for growth, after you read the risks. See tax-free savings accounts and beating inflation for long-term options.
How do you set financial goals with a partner or family?
Shared goals work when everyone has a say. Try this:
- Each person writes their own top three goals separately.
- Compare the lists, and pick one shared goal for the next year.
- Agree on a monthly amount, and who moves it.
- Keep a small personal allowance for each person, with no questions asked.
If your goals clash, find the cost of each, and decide together which fits the budget. Keep it kind. See money as a couple for how to start the talk.
When should you change a goal?
Goals should serve you, so change them when life changes. A new job, a baby, a medical cost or a drop in income are all reasons to review.
Ask three questions: is the goal still important, is the date realistic, and is the monthly amount affordable? If the answers have changed, change the goal, in writing, and carry on. Changing a goal on purpose is planning.
Dropping it without a word is how goals fade.
Frequently asked questions
How many financial goals should I have?
Start with one or two, then add more as the first become habits.
What if my income is irregular?
Base the monthly amount on your lowest month, and add extra when you earn more.
Should I save or pay debt first?
Build a small buffer, then pay costly debt, then save for longer goals. See what to do when you cannot pay your debts.
How often should I review my goals?
Monthly for progress, and once a year for the big picture.
Should I write my financial goals down?
Yes. A goal on paper, with an amount and a date, is far more likely to be reached than a thought.
What if I reach a goal early?
Celebrate, then move the monthly amount to the next goal. The habit continues, and the next goal starts with a head start.
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