Financial Goals: Can You Have Too Many at Once?

Upclose MoneyA fellow reader just asked me this, and I thought I’d respond here instead of emailing her back. I’m not too sure my opinions are necessarily right here, so I’m relying on you all to help get the discussion going :)

Can you have too many financial goals? I say yes and no. As well as “it depends.” Haha… you knew it wasn’t going to be so cut & dry, right? Just like many things in personal finance, there are a slew of variables that need to be answered first:

  • How many goals are we talking? 3? 10? I know personally I’m only good at managing 4-5 TOPS. My ideal # would be 3. Just enough to get a lot accomplished, while at the same time not over-extending myself and diverting my hard-to-keep attention elsewhere.
  • What type of goals are we working with? Long term? Short term? Both long and short? (that’s what she said!) Most of us have a ton of goals on our minds at any given moment – the trick is narrowing them down to actionable events. You can do this by pay period, or by week or even day, but whichever you choose just make sure to give all your dollars a purpose. I like to always be working on at least 1 short term goal, and 2 longer term goals at a time (there are also mid-range goals and today-or-never type goals, but for the sake of me writing a novel here we’ll stick with just the two above), and each one is assigned a chunk of my money every 2 weeks.
  • Are you an efficient multi-tasker? Or do you have major A.D.H.D. like me and struggle? Knowing how you work is an important factor as it’s really going to affect your success or not. This also comes into play as far as what you ENJOY doing more than the other. Some people prefer to pay off all their debt first, where as others (like me) prefer to have more savings in the bank. It’s all about listening to your preferences.
  • How much money do you have to work with? Obviously, the more you have the more goals you can knock off faster. So hopefully one of your financial goals is to find a way to bring in some extra revenue ;) Maybe that’s getting a promotion at work, or doing a little hustlin’ on the side. Just like with everything else, the more money you have the more options you have to play with.

Here are all the goals I’m working on. Keep in mind though that a) I have a hard time thinking way into the future (and thus plan year-by-year usually), and b) I’m hardcore about saving. So I may not be a perfect example here ;) Anyways, here’s what we’ve got:

  • Goal #1 (Long Term): Max out my 401(k) this year. Again, long term for me is 1 year so it’ll probably be categorized differently for you, although 401(k) does = “retirement”
  • Goal #2 (Long Term): Max out my Roth IRA this year.
  • Goal #3 (Short Term): Pay off our latest credit card debt. This is kind of a fluke right now considering we just got the debt last month, and it’ll be paid off by this month (tax refund, baby!) but it is on the docket. Usually our short term goal is to throw all our extra money into savings after all our bills/goals are taken care of. This includes blog money, contracting money, paycheck money (not that there’s anything here due to goals #1 and #2), and whatever else comes our way. It’s not really specific, but it works.
  • Goal #4 (Long Term): Max out the Mrs’ Roth IRA, but only after Goals #1-3 are taken care of.

That’s pretty much it right now. As you can see, we mostly only have major things on the list – and they’re all related to saving :) That doesn’t mean we don’t ever splurge or have fun or anything, but just that most of that fun is already built into our monthly budget. All of these goals have to do with our “extras” outside of the bills, and while we’re bringing in decent income. Who knows when it’ll end?

How about you all? How many goals are you all workin’ on? Do YOU think there’s a limit on the # of goals to work on? Drop some knowledge in the comments and help your fellow reader out :)

(Photo by kevindooley)

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  1. Mrs. Frugal April 14, 2010 at 9:10 AM

    For me it’s about focus so I limit myself to 3-5 medium-term goals. If I’m trying to tackle anything more than that, something is going to suffer or fall off. And all of my goals support a longer term goal such as retire debt free at 55. I don’t know if that’s realistic yet, it’s just bouncing around in my head at the moment. But I do know that we won’t get there unless we pay off all debt, save aggressively and get side income going. So those are the things we’re focused on this year.

  2. Young Mogul April 14, 2010 at 9:39 AM

    Well, I already own a home, so that’s not a goal. I have a career, even though I’m looking to change the company–but, also not a goal. The only goal I have right now is saving a year’s salary because I’m planning to relocate, to another state, and find a job once I make my move; which necessitates the year’s salary. I am a higher education administrator, so my industry wasn’t hit too hard by the recession.

  3. jolie April 14, 2010 at 9:41 AM

    I have three main goals.
    1) pay off consolidated loan (which will be happening today!)
    2) pay off vehicle loan as efficiently as possible
    3) continue with the different savings targets I have.

  4. laura@nms April 14, 2010 at 10:05 AM

    I’m following Leo’s lead {zen habits} and really focusing on one big goal {currently weight loss} and it’s working. I have lots of other goals, financial and life, that I break down into 1 yr, 2 yr etc. I then do a little on these every day/week/month, but my main daily focus is on weight loss.

  5. Renars April 14, 2010 at 10:15 AM

    What do you say about the fact that your goals are totally unmeasurable. You can’t measure “Max out” is it 100k or 500k, so, in fact, it is the same as just writing “do well financially”.

  6. J. Money April 14, 2010 at 10:32 AM

    That’s actually not true. 401(k)s “max out” at $16,500 this year for those 49 and under, and $22,000 50 & up. And Roth IRAs also have max limits — $5,000 (49 and under) and $6,000 (50 and up), if you qualify.

    And my credit card balance is pretty straight forward too. But, even if my goals were vague – or anyone else’s for that matter – if it got you to take action then it would be great. We all work differently, so if “doing well financially” motivates someone I’m all for it.

  7. lenciB April 14, 2010 at 11:02 AM

    I too narrow down my goals to “actionable events.” I try to have 2 long term and 1 short term goal that I focus on. I get these goals off of a larger list of goals, that I don’t focus on until I knock another goal off of the short list. The short term goals that I have are designed to be eliminated quickly :)

  8. Derek Sisterhen | Past Due Radio April 14, 2010 at 11:02 AM

    Great post! Goals have become the code word for “really good ideas that I probably won’t follow through with” nowadays.

    I like setting goals annually, but also having a vision for the next five years. Beyond that, the forecast is a little too hazy to make any accurate calls (who knows what life will bring in the next five years? Or even tomorrow?)

    The difference between a dream and a goal is that a goal has a timeline for completion and a plan of action. Maxing out the 401(k) by the end of the year gives you a timeline and the plan of action is freeing up $1,375 per month to contribute. Another goal could be taking a trip to abroad this summer. Well, we only have a couple of months until we’re there; if it’s a $5,000 trip, can you save $2,000 – $2,500 each month (assuming you haven’t started saving yet)? Or will you need to rethink the timeline for completion? What does it take to free up that kind of money; what sacrifices must be made?

    These are the kinds of questions (and their answers) that separate dreamers from doers.

    Great post!

  9. No Debt Plan April 14, 2010 at 11:02 AM

    Hmmm… I try to set as many goals as possible… but still be achievable. Just enough to stretch me.

    The thing with some of these goals (max out IRAs and 401k this year, etc.) is they are more “set it and forget it” type goals. I could setup automatic IRA payments each month, and that goal is pretty much knocked out (assuming I’ve budgeted for them correctly).

    I guess the work part of the goal is making sure those payments keep going in and that you’ve got the money to set aside for them.

  10. Brandi April 14, 2010 at 11:17 AM

    I have a problem with followthrough if I have too many tasks on my plate. It just gets overwhelming.

    So right now, especially cause I’m hard core into Dave Ramsey’s Baby Step #2 I mostly am focused on paying down my debt as fast as possible. That would be my #1 goal of all time right now (haha contradiction of terms).

    I have 2 other small goals that I work with as well. I wanted to save for a house while also putting a bit of money away in a Roth IRA for my future.

    This TECHNICALLY goes against Dave’s plan a bit, but all of my debt is Student Loans so I feel justified.

    So every month I have $200 taken out of my account and placed equally between house savings and Roth.

    So total I have 3 financial goals to work with. I like that. And as I continue to move forward with #1 and make progress, I’m sure that my focus on 2 and 3 will grow and I’ll start putting more away into the savings aspect!

  11. Griff April 14, 2010 at 11:41 AM

    I try to set short term, medium term & long term goals. A few each to start, keep them realistic & reachable for short term goals & build from there. Its all about disicpline & shopping around…there’s always a better buy out there.

  12. Simple in France April 14, 2010 at 12:57 PM

    I was just thinking to myself I have too much on my financial plate! I’ve decided to accomplish one financial ‘chore’ a day–like complete paperwork to roll over my retirement account, reallocate assets, or figure out why the State of CA paid me when I was supposed to pay them!!

    Also, in terms of goals–I’m thinking of giving our finances a systematic makeover, but I’ve broken it up into about five parts to work on in stages . . .that should work for now, I think.

  13. Abigail April 14, 2010 at 1:12 PM

    I’m worried about just this subject as we get closer to paying off debt. Once the credit card debt is gone, I’ve agreed we’ll chunk down on the student loan (just $3,000 left!) and be done with it in a month or two.

    Once that’s gone, we’ll repay my mom the $2,000 we owe her. Again, that can be done in a month or two.

    But then the real fun begins:

    1. Dog fund — Tim wants a dog and my deal has been that we have to be a) out of debt and b) have money saved up for vet bills. So I am thinking around $750 so that we can put down the $250 deposit and still pay for the dog with money to spare.

    2. IRAs — Yes, that should be number one but… I have been promising Tim a dog for 4 years now. Have a heart! Seriously, though, I want to at least double my contributions (a measly $100 a month right now) and have Tim set one up. Depending on his work situation by summer, I’d love to max these out!

    3. Emergency fund — I told Tim I want to throw $1000-2000 in there right away and have a good head start on it. Then we can just transfer a couple hundred a month or so and build slowly.

    4. Car fund — Tim argues that this should be part of the emergency fund, but I want to start saving up for a second car because a) we’re two people and more importantly b) a 2001 car isn’t going to last forever. And it may get to a point where it makes more sense to buy than repair. So I figure this will be a repair/replace fund.

    5. Downpayment – Houses are crazy cheap here. If we save up around $20,000 – 25,000 we’ll have 20% for a nice house. Even if we only throw $1,000 a month into the fund, that would mean we can be in a house in less than 2 years if we so choose!

    6. FUN — We want to do some travelling. Tim wants to go to Amsterdam (bless his lil stoner heart!) and I’ve been told it’s a gorgeous city assuming you DO make it out of the cafes. But if we’re going there, I think we should at least stop over in London. He’d love the British Museum. Oh, and Tim’s never even been to DC. J Money, can you hook us up with a cheap hotel? I want to drag him around to all the awesome free stuff there is for tourists. Plus the Spy Museum. Because, duh, it’s the Spy Museum.

  14. WR April 14, 2010 at 1:31 PM

    Great post J!

    I like to have a big, juicy goal and a few smaller ones to work toward.

    That said, I think the emphasis should be less on goals and more on rituals. I believe it is the habits or rituals that we develop in the area of our finances that make the most difference in our outcomes.

    Goals should be thought of as less a means to an end but a target that will help you measure the effect of the habit you have created. paying off X or having Y dollars in the bank is less important than having consistency in your wealth plan.

    Going after a single goal at the expense of others can actually hurt you in the long term. For example, foregoing investments in order to pay down debt might not be the best path. There is sometimes an emotional snap-back that occurs after we sacrifice to eliminate a debt. “I deserve it” becomes our mode of operation. Habits, on the other hand, once firmly seated are hard to break. It may take longer and cost more in interest to pay off X while simultaneously building wealth but the habits you have by then are worth their weight in gold.

    I think a first, great goal for most people is to create a contingency fund (I blogged about it here: )

    Another thing about goals, I like to have stretch goals as well as gimme goals (It is nice to have a victory once in a while). Set yourself up for one by throwing in a few goals that are more easily achieved.

    Best of luck!


  15. jake April 14, 2010 at 1:52 PM

    So is the goal: pay off debt, save money and enjoy life too vague?

  16. Anthony April 14, 2010 at 4:30 PM

    My goals are:

    1. Build an emergency fund totaling $28,000 by the end of 2012.
    2. Pay off students loans (approx. $50 at the beginning of this year) by the end of 2012.
    3. Save for a “comfortable” retirement. Currently, my “comfort” level is $2 million at a retirement age of 60 (Year 2045).

    My sub-goals/plans of action to achieve the above goals are:

    1. Save $14,000 for e-fund by end of 2010. Ahead of plan at $7,000 in April.
    2. Pay off 4 smaller loans (out of 6 total) by end of 2010. Ahead of plan. Expect to pay off these 4 in August. Will aggressively pay down 5th loan until Jan. 1, 2011.
    3. Finish e-fund by adding $14k by end of 2011.
    4. Set up retirement accounts. I already have a 401(k); my wife has a 403(b). I will set up IRA’s for both of us next in 2011. Max out the IRA’s in 2011. Max contributions to 401(k)/403(b) will not be part of this sub-goal.
    5. Side sub-goal: Get (more) life insurance. Do this in 2011.
    6. Max out IRA’s and 401(k)/403(b) in 2012.
    7. Completely pay off all student loans and other non-mortgage debt by the end of 2012.

    Are these specific enough?! They are certainly obtainable.

  17. Keith @ LifeTuner April 14, 2010 at 6:35 PM

    What’s the difference between a financial goal and a regular budget item? Why should I be limited to only so many budget items? The important thing is for every dollar to have a purpose, right?

  18. Meghan Fife April 14, 2010 at 7:31 PM

    Right now my #1 goal is to have an emergency fund of $2k.
    #2 Go on vacation this fall. (I’m young and haven’t been on a vacation with just friends so that is my justification. =)
    #3 Start Roth IRA and 401(k) contributions but don’t max until debt is paid off
    #4 Pay off student loan debt

    I do have dates for all of these things, and I’d like to be going after all of them at once but my cash flow simply isn’t allowing (as I’m also paying cash for part of my school each semester.)

    So my decision as of today is to work toward the emergency fund, cash for school and my vacation. Once e-fund is funded that little bit I’ll move on to starting to save for retirement and paying off my student loans. When loans are paid off I’ll beef up my e-fund and start (hopefully) maxing out my retirement accounts.

  19. Brandon April 14, 2010 at 10:07 PM

    I don’t think there can be too many financial goals for anyone. What everybody should be trying to develop is a good financial habit. And with this habit goes all the financial goals that we aim to achieve.

  20. RainyDaySaver April 14, 2010 at 10:31 PM

    I’m going to be nosy here ;) Why is funding the Mrs.’ Roth IRA last on the list, only to be accomplished after goals #1-3? Is she putting money into her own 401(k) and Roth IRA, but you’d be supplementing her contribution at that point?

  21. Chad Smith April 14, 2010 at 11:53 PM

    To accomplish most goals, it helps to put them in writing.

    I found an interesting exercise a few years back that challenged you to come up with 101 goals to complete in 1001 days (a little under 3 years). It was a fun way to get my wife involved in our goal planning because we could jot down anything and everything we wanted to do. The hardest part was actually coming up with the 101 goals. Once you get started it’s easy to get addicted to crossing them off your list. Some of the goals were financial, some were vacation oriented and some were personal growth related. One was as easy as spending 10 minutes a day for a month reading a non-career related book. You most likely won’t accomplish all the goals in the time frame allotted but it’s a fun brain dump exercise that might just motivate you in a way you’ve been yearning for. We have about 4 months left and we have accomplished 75% of the things on our list (including increasing our savings to 15% last year). Great post.

  22. Moneymonk April 15, 2010 at 11:30 AM

    I have reached my short term goals–Retirement investments, emergency fund

    I want to now explore business realted activities oh yeah and also cruise the carribeean.

  23. J. Money April 15, 2010 at 12:26 PM

    @Derek Sisterhen | Past Due Radio – “The difference between a dream and a goal is that a goal has a timeline for completion and a plan of action.” – YES! Love that bro…
    @No Debt Plan – I can see that. As long as you make sure that money is in those accounts like you say ;)
    @Abigail – Haha…unfortunately I don’t have any connections here with D.C. Hotels, but i can hook you up with free beer/coffee when you’re in town ;) The Spy Museum is right down the street too.
    @WR – You’re right – habits & rituals are what power you forward. As long as they are *good* ones ;)
    @jake – They’re too vague for my taste, but if you rock it out then all the better! As long as you’re happy and successful in your own eyes, it doesn’t matter what anyone thinks.
    @Anthony – Holy crap, yes! haha…you’re funny dude. Well done.
    @Keith @ LifeTuner – Good question…guess it’s just a matter of the way we think of things. I don’t want to think of all my budgeting lines as “goals” even though they are. That’s just me though – if it works for you then great!
    @RainyDaySaver – Haha, no worries. I max out my stuff first because I have the 100% matching and because I use all my “do whatever i want with” cash for the Roth. She prefers to use her money differently (not that she spend a lot really being in Grad School). And then the Credit Card is both of our accounts. Soooo, basically I’ll be using the rest of my “do whatever with” money to fund her account when I’m done with all of mine. That make sense?
    @Chad Smith – I LIKE THAT!! I think you’re right in that 101 goals would take some time coming up with, but def. seeing it on writing will help motivate you…it’s going on my list to consider ;) “101 things to consider” list – haha….

  24. Double My Net Worth April 19, 2010 at 9:21 AM

    That’s a good question you bring up and the comments here are certainly showing us there’s a wide range of thought from a few manageable goals to at least a 100. Personally, I am starting out with just a few general goals, to double my net worth every three years, increase my dividend income to $100 per month, increase my Internet income to $300/month, and increase my financial education. These are pretty broad, only because I am not sure where to narrow down my focus yet. I will check back in with you and let you know how my goal setting goes.

  25. Budgeting in the Fun Stuff April 19, 2010 at 3:49 PM

    Financial Goals:
    1. Minimum contribution to 401k to get maximum employer match. Check.
    2. Max out my Roth IRA. In the process of check.
    3. Max out hubby’s Roth IRA. Not yet.
    4. Pay off hubby’s car. In the process…it will probably take a whole year from now though.
    5. Pay off 15 year mortgage in 10 years total. In the process of check.
    6. Increase emergency fund to 6 months of expenses ($20,000) by the end of 2011. In the process of check.
    7. Contribute at least $2500 a year to our Scottrade investments (our bridge fund between early retirement and touching our 401k and Roth IRAs). Check.
    8. Continue monthly contributions to our Home and Auto maintenance account, vacation account, and fun money accounts. Check.

    So far, so good. I really hope we have enough to open and fund a Roth IRA for my hubby this year…we might put it off while we pay off the car though.

  26. J. Money April 20, 2010 at 12:08 PM

    All great goals guys! And specific too which usually helps you cross them off faster I find :)