How to Set Effective Financial Goals You Can Actually Achieve


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Financial goals are big-picture objectives you set on how you want to save, spend and invest your money. 

Having a financial plan can neutralize the impact of various financial sins. It acts as a guide through your financial journey; help you get back on track when you hit a snag or when the markets dent your investments.

Here we will cover: (1) how to set effective goals, and (2) how to achieve those goals.

How to Set Effective Financial Goals

1 Determine Your Net Worth

Before anything, you’ll need to determine your financial position i.e., your net worth. To arrive at a figure, subtract your debts and liabilities from your total assets and investments.  Having this number at hand will help you refocus on what matters and what needs to be done. It will also reveal past successes and failures more simply and reveal areas that you need to better prepare for in the future.

2 Determine What You Want to Accomplish Financially

What are your goals in the short-term, long-term or medium-term? Figure out what matters to you and jot EVERYTHING down, no matter how whimsical or distant it may be for further consideration. Goals need to motivate us, push us but not overwhelm us.

Some common goals people have:

  • Pay down debt
  • Increase my income
  • Get a side hustle
  • Create and follow a budget
  • Increase net worth
  • Get a better paying job
  • Buy a car
  • Buy a home
  • Start a family
  • Improve credit score
  • Save on utilities
  • Go back to school
  • Take a vacation
  • Read financial books
  • Save for retirement

After jotting them down, sort your goals depending on time i.e., is this a long-term, medium-term or short-term goal.

3 Determine How Much You Need & When

Here, we need to estimate how much we need and when we need it to achieve the goal. To arrive at the exact future by factoring in inflation. For example, assume that you want to make a big purchase in 5 years – consider how inflation will affect the price and estimate that price of the item in 5 years.  After that, rephrase your goals applying a SMART goal strategy i.e. make it Specific, Measurable, Achieve, Relevant and Timely. SMART.

Therefore, you will need to determine:

  1. What am I trying to achieve?
  2. How will I achieve it?
  3. Who/what does it involve?
  4. Why is it so important to me?

For example:

Save $5,000 for the next 18 months for a Caribbean Cruises vacation in the next 2 years.

It’s specific (you named the trip, measurable (you’ll see the amount saved go up every month), achievable (assuming you can save $300/month), relevant (you want to take a vacation), and time-bound (getting it done within 18 months)

4 Determine How Much Risk Can You Take

High, Medium or low-risk appetite. We all have different abilities to take on risk depending on age, existing liabilities, earnings, dependants, investments and what we do for a living. Given the risk/reward relationship of market investments, knowing your risk appetite will guide you in making various decisions on investments to meet your goals.

Here are some tangible components of risk that you need to determine your risk appetite:

  • Time – Time is key and it needs to be considered over an intended time frame. While experts agree that the chance our investments will make money over time, the prospects for the next 2 or 3 years isn’t clear; If you need your money within the medium term, you have a worry about timing.
  • The probability of Loss – The next component of risk is probability; the probability of loss. When making financial decisions, one needs to be mindful of the possibility of loss. All investments carry a varying degree of risk and you can take steps to reduce those risks – but never completely eliminate them. So how much risk can you handle?
  • The magnitude of Loss – The final component of risk is the magnitude. How big of a risk are you taking? Here we look at the impact of the investment over a Kenyan shilling possible loss. For example, someone struggling with debt loses  KES 1M, such a loss would be a game-changer and therefore, not an acceptable position.

Ultimately, when you are developing your goals, you will need to understand what you are risking, how likely that risk is to appear and the magnitude and probability of that risk changing over time.

5 Determine Where Should You Invest

You have a wide range of asset classes that you can pick from i.e., equity, debt, real estate and cash instruments depending on your risk appetite and goal-term.

Investment RiskInvestment TypeNote
High Risk
  • Options
  • Futures
  • Convertibles (e.g., art, cars)
Reserved for sophisticated investors.  
Medium Risk Investments
  • Real estate
  • Equity
  • Mutual Funds
  • Large/small-cap stocks
  • High-income bonds/debt instruments
Suitable for medium to long-term investment terms. Some of these investments offer a stable return while still allowing for capital appreciation.
Low-Risk Investments
  • Government bonds/debt
  • Money market/savings accounts
  • CDs, Notes, Bills
  • Cash and cash equivalents
Suitable for short-term investment terms and have foreseeable returns.

Things to Remember:

(1.) Your financial goals are not set in stone.  You can alter them as you progress along or even allocate money from one goal to another. It is okay to rank your goals and achieve them based on priority, or even eliminate goals that are no longer favourable.

(2.) Since you are merely estimating, some of your goals are really just guesswork. For instance, will KES 1M really be enough for a house down payment? Maybe. Maybe not. After all, the numbers are not what really matters, here. It’s the content.

(3.) Some of your financial goals will go uncompleted and that is okay. Many of us set very high expectations in life – which is cool! So don’t beat yourself over unmet goals. After all, you may run into spending, income and even investment issues. What matters most is that you get back on track, learn from your mistakes and keep in mind it ain’t the end of the world.

(4.) You can meet and even exceed your investment goals. You can do it. So instead of dwelling on mishaps that threaten your goals, refocus yourself and strive to exceed them.

How to Achieve Your Financial Goals

In order to increase your chances of achieving your goals, the goals you set need to be:

  1. Personal: Your goals need to be tailor-made to your specific circumstance.
  2. Automate: Automating your financial life will increase your chances of success and simplify your life.
  3. Breakdown goals: Breaking down your goals and accomplishing them bit by bit, will ultimately guarantee your success.
  4. Track progress: It is not only motivational to see how far you’ve come, but it will also keep you focused on the end game.
  5. Develop good habits: Learn to maintain good habits; excellence isn’t an act but a habit.
  6. Get help: Seek the help of somebody you trust to encourage you and hold you accountable.


Setting goals is crucial for your financial success, and it’s easy. You really don’t need much help with this. You can most definitely set and achieve your own financial goals. Take your time and give it some thought before you draft up your financial goals going forward. Though a financial planner, can make the process a lot easier and more effective, a plan now, will get you on the right track before you seek professional advice. Also, don’t forget to regularly review your situation and keep up to speed with any legislative changes that may affect your financial future.

Happy Building!

Image credits: Top by Pixabay, via Pexels.

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Irene Makanga
Irene has an MBA in Finance and is an avid businesswoman, passionate about financial literacy.


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