05/08/2013 10:20 BST | Updated 05/10/2013 06:12 BST

Spend Less, Save More and Be Happy by Setting and Achieving Financial Goals


The current 'see it, buy it' credit card culture has meant that for many people financial goals no longer exist. However, many major financial commitments such as buying a property, saving for retirement or investing in your business can't be paid for by credit card and take real planning and dedication to save for.

Setting financial goals can be empowering as you will be in control of your money and subsequently, take your life in the direction you want it to go.

Setting goals

Goals can be split into 'must haves' and 'would likes'. For example, saving for a pension to live off in retirement is a 'must have', whereas saving enough to be able to afford a yearly two week holiday for many people is a 'would like'. Some goals will be short term, such as buying a new outfit for a business meeting, and some will be long term, like saving for a deposit on a house.

Everyone's financial goals are different and the priorities and time frames will depend on you and the stage you are at in your life. Below are some examples which might be appropriate for you.

• Saving for a house deposit

• Paying off credit card and loan debts

• Paying off your mortgage

• Starting or investing in a business

• Saving for your/your children's education

• Saving for your/your children's wedding

• Saving for your pension

• Regular holidays

Once you have listed your financial goals, mark next to them whether they are 'must haves' or 'would likes'. When you prioritise your goals you can put them in order of the goals you must achieve and the ones you would like to achieve and when you want to achieve them by. You can also add rough costs for each goal and put these next to your list as well, which will give you a clear target to save for.

You can work out what you need to save monthly for your goals by dividing the rough cost of your goals by the date you would like to achieve them by. For example, if you've prioritised furthering your education and estimate that it would cost £5000 to complete a training course, and would like to start it in 12 months' time, then you would need to save £416 a month to reach this goal. Working out your goals in this way will help you to make realistic priorities, for example, if £416 was too much to save each month, you might have to save £208 per month over two years instead. It will seem strange at first to think this far ahead but it's important to break the 'buy now, pay later' habit and instead set realistic savings goals.

Dealing with debt

If you have debts then paying these off should be your top priority as they will be the biggest barrier to achieving your financial goals. Martin Lewis of explains that debts usually cost more than savings earn so it's usually best to pay off debts before you begin saving and to pay off your most expensive debts first, such as credit cards. If you have significant debts then it might be worth speaking to an independent financial advisor for advice on how to handle the debt. Although paying off debts before saving for your other financial goals should be a priority, there is one savings fund which should be above this on your list of priorities - your pension.

Prioritising your pension

Every week there is an article in the news about an impending pension crisis as employers are failing to act on auto enrolment pensions and one in five employees in the UK believes they won't be able to afford to retire. Planning for retirement should be at the top of the 'must have' list for the majority of people as State Pensions are unlikely to be enough to provide people with a comfortable life after retirement. You don't necessarily need to invest more money in a pension but just seeking financial advice on how your pension could work harder for you will mean that you are taking care of your retirement whilst also saving for more short term goals.