Successful money management is impossible if you don’t know what financial goals to set. NMTBP looks at 7 financial targets that help you save and spend smarter

28% = The share of your pretax monthly income that should go toward housing costs

Why this target: During the housing boom, many people laid out unrealistic amounts of their gross income (sometimes 45 per cent or higher) for their monthly mortgage payment, rates, and homeowner’s insurance. And everyone knows how well that turned out! These days, banks have tighter lending standards, meaning they may not lend to someone whose housing payments are liable to exceed the benchmark of about 28 per cent. If you want a home that takes you over this limit, getting a loan won’t be easy. Typically, you’ll need a minimum credit score of around 740 and a down payment of 30 per cent or more

How to hit it: Use a mortgage calculator to estimate costs (try the one at the Beeb). If you’re just over the 28 per cent mark, shrink your monthly costs by making a larger down payment and signing up for a high-deductible homeowner’s policy, which could reduce your premiums by 25 per cent

120 – your age = the maximum percentage of your retirement savings that should be in equities

Why this target: Before the recent recession, many financial planners used 100 minus your age as a rule of thumb. So why the increase? Generally, people need more exposure to equities to recoup what they lost during the market crash (since equities have historically outperformed other investments). Equities can be risky, so the closer you are to needing the money— say, for retirement — the less you should gamble with it. That’s why this formula becomes more conservative year by year as you get closer to cashing out.

How to hit it: Rebalance your retirement portfolio annually to adjust your equities/bonds/gilts. Or consider investing in a fund that works for you, gradually shifting money out of stocks and into bonds and cash as you age. Look for a fund with low fees that sticks close to this formula. Fidelity provides one such target retirement fund

5% = The maximum percentage of your take-home pay that you should owe to credit card companies

Why this target: In an ideal world, you’d pay off your credit card every month. Realistically, however, you probably carry a balance; in June, the average British household has £2,495 in credit card debt, up 6.83 per cent in a year. Next to overdue taxes, this is the most expensive money you can owe—the average interest rate is a whopping 19.1%, according to a recent moneyfacts.co.uk survey. And the bigger the debt, the deeper the financial hole you’ll find yourself in. That’s why experts suggest you work to get your credit card debt under 5 per cent of your net pay—meaning, if you take home about £4,000 a month, your revolving card debt should not exceed £200

How to hit it: If you owe a substantial amount, consider making double or even triple the minimum payment until you dip under the 5 per cent mark. If you have several cards, try to pay off the one with the lowest balance, then move to the one with the second-highest balance, and so on. The immediate gratification of eliminating one debt will make you feel as if you can tackle the other cards. If you can, sign up for a card with a 0 per cent balance-transfer incentive, but be sure to pay on time every month, or the promotional interest rate will increase

10% = The minimum amount of your pretax income to save for retirement

Why this target: Chances are, you want to maintain your current living standard during your leisure years. First, the bad news: Experts used to say that you would need 60 to 80 per cent of your current working income for your retirement years; now they recommend 100 per cent due to rising care costs. The good news is that it is possible to save that much as you regularly tithe your earnings. Assuming you began saving at age 25, aim to save 10 per cent of every pay packet now. If you began saving at age 35, you must put aside as much as 20 per cent of your annual income. Use this retirement calculator at Age UK to compute your exact savings goal

How to hit it: Sock as much as possible into your company and personal pension. The annual maximum for tax relief is £60,000. If you can afford to save more, open an ISA, into which you can put up to £20,000

1 = The number of times a year you should review your retirement portfolio

Why this target: Saving for your post-job life is a long-term goal, so you don’t need to tweak your investment choices often. That applies even if your golden years are fast approaching. And you certainly shouldn’t try to time the market—that is, buy and sell according to whether the FTSE is up or down since experts say it’s nearly impossible to succeed at that

How to hit it: Pick a month to review your finances. For many, January is best, as that’s when year-end statements arrive, so all the paperwork is at your fingertips. You might not realise this, but a market swing in either direction could change your allocations. The annual review also lets you do a gut check on your risk tolerance. Although you should try to stick with the 120 minus your age guideline, it’s OK to amend your allocations slightly if you’re losing sleep. Also, check-in is a time to review your retirement plan and overall financial situation. See if you can increase your savings contributions, even if by only 1 per cent