How To Set Financial Goals

In my previous post I pointed out to you how we must have financial goals before we even think about investment.

Today I’m going to show you how to set financial goals for your own life.

What Are Your Financial Goals?

Now, you may ask me what goals qualify as financial goals. The answer is: who do you want to be, and where do you want to be in the future?

Do you want to be someone who is financial independant, someone wealthy, sponsor of your children’s education, a philanthropist, someone who retires in Langkawi island?

Then there are several major events in life that will cost a lot of money. Examples are wedding(s), buying property, buying cars, children education, and retirement.

All these should be part of your financial goals.

Setting financial goals is as simple as following the SMART acronym.


The SMART way to set financial goals (or any goals for that matter) is to define goals that are:

  1. Specific
  2. Measurable
  3. Ambitious
  4. Result Oriented
  5. Time Bound


I wrote a bit about being specific in the previous post. To be specific means your financial goal is clear, unambiguous and targeted.

An example of a specific financial goal would be:

Have enough passive income to support me and my wife’s retirement.


A measurable financial goal is one which you can measure in terms of amounts, quantities or quality standards.

Adjusting our previous example to become measurable would be:

Have RM8,000 monthly passive income to support me and my wife’s retirement.

This amount is just a number I picked out of the air, of course.

How will you know the exact amount to put in your goals? For example, how will you know how much retirement income you need when it is so many years ahead?

It’s difficult to estimate sometimes. You can use my future value calculator to assist your calculations.


The sky is the limit when it comes to setting financial goals. Try to set goals that are challenging, but at the same time be realistic.

Set a balance between something that is out of our comfort zone, but not so difficult that it becomes demotivating.

Let’s make our sample goal a bit more challenging:

Have RM10,000 monthly passive income to support me and my wife’s retirement.

Result Oriented

Your financial goals should be meaningful and productive to your life and those around you.

Do not set goals that have little or no value.

Time Bound

A time-bound goal means you have to set a deadline for yourself.

This is important, because this will determine how you can plan to achieve those goals.

Having a time-bound financial goal can also help to overcome procrastination.

A final adjustment to our earlier example will be:

Have RM10,000 monthly passive income by the year 2030 to support me and my wife’s retirement.

Your deadline can also be adjusted to be more ambitious.


The next thing I like to do after writing down my financial goals is to define milestones for each of those goals.

For example:

2015: RM2,000 monthly passive income

2020: RM4,000 monthly passive income

2025: RM7,000 monthly passive income

2030: RM10,000 monthly passive income

This has two advantages. First, it can help you to check your progress as time goes by. Second, a seemingly impossible task can be broken down into smaller achievable steps.

I like to break it down further into a 5-year plan, a plan for this year and then a quarterly plan.

If you can’t find a way to set milestones for your financial goal, then your goal might have to be revised to become measurable or time-bound.

Review and Adjust

Periodically take a look at your financial goals to see how you have progressed.

If you are on track, imagine how good you will feel! If you are falling behind, perhaps it’s time to make extra effort.

I leave it to your personal preference and creativity to measure your progress and motivate yourself.

Financial goals are not set in stone. There is nothing wrong with changing goals when your life situation changes.

Just make sure you are not changing the financial goal because you are giving up.


You have seen how easy it is to create or improve your financial goals the SMART way.

I have even shown you how you can break down your grand master plan into manageable milestones.

Now I leave you to work out your financial goals. It would be best to write them down somewhere instead of keeping it in your head.

Once you have your financial goals in place, THEN you can start to plan how you are going to achieve those goals.

That’s where financial planning and investments come into play.

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