How to create long-term financial goals

Whether you’re saving for a home, your education, or your retirement years, establishing long-term goals is key to building a financially healthy future. But with bills to pay and budgets to manage in the present, setting money aside isn’t always plain sailing.

With this in mind, we’ve pulled together some insights on how you can create and work towards your goals, all while effectively managing your current finances. Explore tips on breaking down your goals, monitoring them, and staying consistent with our guide.

In this guide:

• What are long-term financial goals?
• How to define and achieve your long-term goals
• Next steps
• Moneyboat are here to help you stay afloat 

What are long-term financial goals?

Long-term financial goals are the objectives you set for yourself over an extended period (typically five years or more). Some examples of financial goals like this may include:

• Retirement savings: Building a pension pot (either through a workplace pension or a private scheme) can help ensure you have the funds to live comfortably after you retire. You may also want to set yourself the goal of maximising your pension so that you can retire early.
• Homeownership: Saving for a house deposit is one of the most common long-term goals in the UK, especially for first-time buyers.
• Education funding: Saving for university is another long-term goal people set. While student loans are common, many parents choose to set funds aside for their children’s education (as well as their own).
• Debt repayment: Becoming debt free (by paying off credit cards, personal loans, and student debt) is another long-term financial target people might set.

Goals like these typically demand more commitment than short-term goals, requiring effective planning, consistency, and money management.

The benefits of setting long-term goals

Setting long-term financial goals provides a clear roadmap for your financial future, but this is just one of the many benefits. Long-term goal setting can also help you:

• Establish healthier habits: Working towards a long-term goal encourages you to practise 
  effective monthly budgeting, track your spending, and be more mindful with your money. In order to achieve your savings goals, you’ll need to successfully manage your current finances.
• Stay motivated: Having a clear goal and timeline helps you stay motivated and focused. It gives you purpose, and a reason to stick to your budget.
• Gain peace of mind: When saving for a long-term goal, you’re doing something your future self will thank you for. While it takes consistency and commitment, knowing that you’re working towards something important can give you peace of mind.

How to define and achieve your long-term goals

After running through what long-term goals are as well as their benefits, it’s time to look at how you can set and achieve them.

1. Make your goal specific & measurable

First things first, you’ll need to be specific when setting any long-term goals. For instance, let’s say you’re looking to buy your first home. Instead of saying, “I want to save up for a house deposit”, you’ll need to outline your ambitions more clearly. This might sound something like: “I want to set aside £20,000 for a house deposit in the next five years”.

In this case, the goal is clear and time-bound, giving you something specific to work towards. Being detailed like this is important, as it will help you monitor your progress and stay on track.

Many people find the SMART framework handy when goal setting, so we’ve outlined the basics of it below:

• Specific: Are your goals specific enough? If not, try to define them more clearly, outlining exactly what they are and when you’d like to achieve them by.
• Measure progress: It’s important to keep track of your progress as a way to boost your motivation. So, check in with yourself regularly, and see whether you’re on track.
• Achievable: While it’s great to be ambitious, it’s also important to make sure you’re not setting yourself up for failure. For instance, you might find that you’ll need a few more years to hit your goal than you originally thought.
• Realistic: Being realistic also isn’t a bad thing. It just means you’re being honest with yourself about how much you’re going to be able to save.
• Timeline: As previously mentioned, setting a timeline is key when it comes to long-term goals. It can help provide you with structure, focus, and motivation.

2. Break things down into smaller milestones

Big numbers can feel overwhelming when setting long-term goals, but breaking things down can be a huge help. So, if your goal is £20,000 over five years, you’ll need to save:

• £4,000 a year
• Around £333 a month
• £77 per week
• If you’re saving with a partner, that’s around £39 each, per week

Seeing your savings goals broken down into smaller chunks can also help you identify areas where you might be able to cut back and add even more to your pot. For instance, you might realise that in finding and cancelling subscriptions you don't use, and cutting back on your weekly food shop, you’ll find that £39 to pay into your pot.  

3. Assess your current financial situation

Reviewing your current financial situation is crucial when setting long-term goals.

Before you commit to saving, you’ll need to manage your personal cash flow. Make sure that you have a clear picture of your income and expenses, and that the goals you’re setting are going to be achievable.

Once all your essential financial obligations have been met, take a deep dive into your non-essential spending and see whether there are any areas where you might be able to cut back. Remember, every bit saved will help you achieve your goals.

Next steps

Once you’ve got your goals in place, bear the following tips in mind to ensure you hit your targets:

1. Automate your payments: To help you stay on track, you’ll need to set up automatic payments to your savings account. This is a great way to help you stay on top of things and ensure you stick to your goals. 
2. Monitor and adjust: Make sure to revise your plan every few months to ensure you’re still on track. If not, you can then adjust things as necessary. And who knows, you might find that you’re able to save even more than you set out to.
3. Stay consistent: While progress can feel slow, it’s important to stay consistent. Keep your long-term goal in sight, and remind yourself why you’re saving in the first place. 

With a clear strategy and consistent effort, your long-term goals are definitely achievable. Whether you’re aiming to buy a home, retire early, or save for your education, keep the above tips in mind and get started today!

Moneyboat are here to help you stay afloat

When unexpected expenses crop up, it’s not always easy to focus on setting money aside for the future. Bumps along the road (like unexpected car repairs) can derail your progress, but this is where we come in.

Here at Moneyboat, we offer fair and flexible short-term loans ranging from £200 to £1,500. If you meet the eligibility requirements, you can then use these funds to cover your unexpected expense, later paying the money back in manageable instalments.

Alternatively, if you’re looking for more insights, just head over to the Moneyboat blog. There you can read our handy finance jargon dictionary or learn how to budget when you're paid weekly.

For additional support and independent advice, there are a range of third-party organisations who may be able to help. Reach out to Citizens Advice and StepChange for free, expert guidance.