How to set meaningful financial goals
Tapping core values and emotion can help you develop a meaningful path for the future
The economic upheaval resulting from the COVID-19 pandemic has caused many Americans to rethink their relationship with their financial goals. For example, 83% said they want to increase savings over the next year to minimize financial worry according to recent research by the Harris Poll for Empower Retirement and Personal Capital.
As you consider your own goals, it’s important to reflect on your priorities. Rather than targeting generic objectives, establish goals that reflect meaning and purpose in your life, advises wellness expert Deepak Chopra. Using money in a way that aligns with your values can bring joy and a deep sense of financial confidence, he says.
Here’s a look at how to create financial goals that help you pursue a more fulfilled life.
Evaluate your relationship with money
There’s more to money than just dollars and cents. Emotions can play a big part in our finances, and money decisions are often driven by how we want to feel. Sometimes emotions can be detrimental, leading to panic selling when markets are volatile, for example. But they can also be constructive.
Ask yourself how you want to feel about money. Perhaps you want to feel secure, content, independent or free. Once you’ve identified your desired feelings, consider the actions that will help you realize them. For instance, will saving for an emergency fund help you feel more secure? Or will setting money aside for a vacation help you feel more content?
Determine your core values
Your core values are the things you care about most in life, such as spending time with family, education, travel and charitable giving. In an ideal world, your financial goals will be aligned with these values. For example, you might build charitable contributions into your annual budget.
You don’t need to have a lot of money or to be debt free to prioritize your values. For example, spending time with your family could mean an elaborate trip abroad, but it could also mean a weekend camping trip at a local park. Tying well-being to your core values can help bring you a sense of fulfillment no matter where you are on your financial journey.
Set short-term and long-term financial goals
With a clear understanding of how you want to feel and the values you want to prioritize, you can set meaningful goals. Be as specific as you can. For example, retirement is a common goal, but you can make it personal by digging deeper into what an ideal retirement looks like to you. How do you want to feel? How will you spend your days? And who will you spend them with? Work backward from those goals to understand questions like how much you’ll need to save and whether you’ll want to pay off your debt before you retire.
Developing goals with a deep sense of meaning can motivate you to work toward the life you want to live, and developing short-term financial goals alongside the big ones can lead to a stronger sense of momentum.
Open an Empower Investment Account, which can help you manage your money and invest for your future.