The Difference Between Money Reality and Financial Goals

When you look at where your finances are now, you probably see the gap between your financial reality and your financial dream. In many cases, it might seem as though it will be impossible to bridge that gap and create a new financial reality that encompasses your dreams. The good news is that it’s not impossible. In fact, if you follow the steps outlined below, you could be well on your way to creating your ideal financial reality.

Break Down Big Goals

One of the factors that makes your goals seem so unattainable is the sheer grandiosity of them. But when you break these large goals down into smaller goals that can be attained in intervals, they are much easier to both visualize and achieve.

Let’s say your goal is to buy a house. To break this down into smaller goals, you can:

  • Set a goal to save the downpayment by a certain date
  • Set a goal to start saving the difference between your rent now and your mortgage, insurance, and property tax payments once you buy
  • Set a goal to improve your credit rating, so you get a better interest rate

Let’s look at another example. Say your goal is to pay off $25,000 in student loan debt. You can break this down into the following smaller goals:

  • Start living according to a budget
  • In that budget, set aside 10 percent of your income for student loan repayment
  • Pay off 10 percent of your loan balance this year, 20 percent of the balance next year, and so on

Create Steps for Accomplishing Smaller Goals

Once you’ve determined what the small goals are, you need to come up with a plan for accomplishing each of them. Using an example from above, let’s say you want to save for the downpayment on a house. Your steps toward doing so might be:

  • Save $500 a month
  • Sell any unused vehicles, electronics or other expensive items and put the money toward the downpayment savings
  • Get a part-time job during the holiday season and save your paychecks toward your downpayment

Through the creation of smaller goals and steps to take toward making them a reality, you will create a viable plan for reaching your financial ideals, and you’ll have built-in measures for accountability that keep you on track.

How to Build an Emergency Fund

If you are like most people, you don’t have a substantial emergency fund. What constitutes as an emergency fund? Great question. An emergency fund is a runway of at least 3 months of your salary – the more the better. The hard part for most people is starting and consistently adding to that fund. With bills and unexpected costs, it can be even more difficult. The list below provides some tips and tricks on how to start and maintain an emergency fund for when life throws curveballs at you.


Create an effective budget for yourself. This will allow you to see where you are overspending. Additionally, sticking to that budget gives you an opportunity to take the money you were previously overspending and put it towards your emergency fund. You may also decide to sacrifice some things, like eating out, in order to stick to your budget. This can be hard at first, but you will start to become adjusted to the new budget and lifestyle that comes with it.

Decide Where to Keep the Money

You will need to have a place to store your money that is easily accessible in the event of an emergency. Creating a separate checking account can be a great way to have access to the money in a quick way. Having the additional account also makes it easier because there is no mixed money. That account is solely for emergencies.

Use it for Emergencies Only!

This will take a bit of discipline, but your emergency account is for…emergencies! What counts as reason to withdraw from your new account? There are quite a few instances where your emergency fund is appropriate to draw from. Here are a few examples:

  • Major car repairs
  • Sudden loss of job
  • Medical bills
  • Home repair

These are all instances where having a cushion of money will be extremely beneficial.

Automatic Payments

Treat your emergency savings account like one of your monthly bills. Set up automatic payments and stick to them! Knowing that your budgeted amount will end up in your account every month will be an excellent piece of mind. Plus, you can always make additional deposits if you end up under budget – and that’s a bonus!

Set Goals

Set goals for yourself. Things like “after x months I want to have x amount saved.” Goals are incredible ways of keeping you accountable to yourself and also marks your progress. When you hit your goals, make sure to give yourself a small reward. You earned it!

Financial Bucket List

When people think of a bucket list, most often they associate it with experiences they want to have before they pass on. Bucket lists in the traditional sense are great, but there is another type of bucket list that not too many people spend time thinking about. I’m talking about the financial bucket list. You know – what are the financial goals you want to hit before you kick the bucket? Sketch out your own financial bucket list or feel free to steal some from the list below!

Pay off Student Loan Debt

Paying off student loans is a big one on a lot of people’s financial bucket lists. With the cost of college rising it may seem nearly impossible, especially for millennials. This is a great thing to put at the top of your bucket list. It is absolutely achievable and can be done so well within your lifespan. Come up with a plan and start chipping away at it.

Having Perfect Credit

Having perfect credit open’s a lot of doors for you, but it’s also a pretty awesome achievement. If you feel like you want to earn this badge, stick it on your bucket list and start thinking of ways to improve your credit. You can start by making payments on time and keeping debt as low as possible.

Retiring Early

Wouldn’t you love to retire early with enough money to enjoy it? This is a great thing to add to the bucket list. How are you going to achieve it? If you are starting this bucket list at an early age you’re in luck because time is quite literally on your side. Invest the full amount in your 401k to get full company match. If you are eligible, open a Roth IRA as well and plan to hit the cap amount every year. If you plan well, you will easily be able to take an early retirement!

Setting Your Kids Up for College

You know just how much college costs and how hard it can be to pay down that debt, especially if you put this at the top of your bucket list. If this fits your bucket list goals, set up a college account for you kids and stuff as much money in there as you can for them. They will be eternally grateful and even more surprised if they don’t know about it.

Buy a House

We all need a place to live and many people rent in order to do so. There is absolutely nothing wrong with that, but if you have a goal of owning your own house someday – throw it on the list! Owning a home is a major financial investment and should be taken seriously. You will want to start saving for a decent sized down payment and also have the money to make repairs and upgrades to really make it your dream home.

Pay for a Car in Cash

Paying for a car in cash may not be the most practical thing that ends up on your bucket list, but you have to admit it would be pretty darn cool. If you want to look like a big shot and see a wild reaction from a salesperson, start planning and saving for the car you want to pay for outright. Much like everything else on this list, with proper planning and saving, you can achieve it.