Financial goals help you have more direction when it comes to your money. It is so easy to lose track of your money. Time can escape from you and before long, you have no idea why you haven’t bought a home, paid off debt, or done something else. With good goals in place, you can tell your money where to go. These goals help you to plan out your future, but how do you choose the right financial goal?
There are many examples of financial goals that you can choose from paying off debt, coming up with a budget, saving for a home, or giving more money to a charity. Financial goals are an idea of what you would like to do with your money. The plan for how to reach those financial goals comes later.
It is important to have these goals in place. This helps give you more direction for your money and can help you get ahead in life. Let’s take a look at some of the best examples of financial goals that you can consider so you can tell your money where to go while creating a plan that helps you meet those goals.
What are Financial Goals?
To keep it simple, financial goals are just objectives or milestones that you work towards for your money to cover at specific times in your life. Whether you want to build up your own emergency fund, pay off all of your debts, or going on a big vacation, a financial plan can help you reach these goals.
However, you do not need to tie these financial goals down to any specific purchase. While many people choose a financial goal that is attached to purchasing something, or at least paying down past purchases that they made, this is not necessary. For example, you could do some of the following and they would still count as financial goals
- Earning extra money through a side income
- Following a minimalist lifestyle
- Finding ways to make more money at your current job (working more hours, asking for a raise, working towards bonuses)
- Changing your mindset from scarcity to abundance
- Giving more of your money to a worthy cause.
What are Some Financial Goals for Me?
There are a lot of great financial goals that you can decide to use. Do not pick a financial goal because someone else is doing it or you think you are supposed to do something. Pick a financial goal because you have a passion for it or because it will really fit into your own life. Some financial goals that you can consider include:
1. Stick to a spending plan each month
The first one we will discuss is setting up a budget. A spending plan, or a budget, helps you determine where your money should go each month. You get to be in full control during this, deciding what to pay, how much to pay, and whether you will pay down extra on a debt or something else. Come up with a budget and update it every few months if something does not seem to work well. Personal finance is key.
2. Write down everything you spend for a month
Sometimes the best way to figure out where our money is going is to see how we spend it. It is easy to spend money here and there without even thinking about it. But when we are forced to write down every penny that is spent, we see how it all adds up. Make this one of your financial goals and see how quickly it helps to curb your spending habits.
3. Pay off debt
One of the first financial goals that many people consider is paying off some of their debt. Debt is a big problem in the United States and it can hinder you from reaching many of your dreams and goals. Think about how freeing it could be to finally have all of your debts paid off and never having to worry about them again.
If the idea of paying off your debt seems too intimidating, then start out slow. Make it your financial goal to pay off just one of the debts at a time. Then, when one is paid off, you can change the financial goal to paying off another and so on. This way the process of dealing with the debt is not quite so stressful.
4. Do not add more debt to your plate
For some people, they may not be able to come up with enough money to pay off the debt that they currently owe. For this one, it may work best to work on not adding more to the debt you currently have. Make it your goal for the next six months to not add any more money onto a credit card, not take out a new credit card, and not request any new loans in the process. This alone can make paying off your debts seem faster and will give more financial freedom too.
5. Save for a vacation
You can even make a financial goal out of saving for a vacation. It may seem silly to think of this as a financial goal. But since a good vacation does cost money, it is a good idea to make it one of your financial goals before you head out on the next one. Having the money upfront when you head out on vacation, rather than putting it all on a credit card and hoping you can pay it off can make a big difference in how much fun you can have on vacation. Start saving early for that vacation and make it your new financial goal.
6. Save for a home
Buying a home is a big purchase. Most lenders want to have some kind of down payment before they agree to give you the loan. And then there are other closing costs to consider along with an inspection, new furniture, utility set-up and more. It adds up quickly and it is best to have as much money set aside as possible.
If it is your goal to purchase a home sometime in the future, it is time to make it a goal to start saving up for a home. The more money saved up the better. But any little bit will help. Consider the type of home you want, the price point that you want to stick with when purchasing the home, or even the area where the home would be located and use that as a base point for your emergency fund amount.
7. Start an emergency fund
Emergency funds are so important for many individuals and families. Yet, so many do not have these at all. If an emergency happened to them today, they would not have the money available to help take care of it. An emergency fund is a good way to help protect you if something unexpected does come up.
You do not need to have a large emergency fun in the beginning. Even a few hundred dollars saved up can make a difference when something goes wrong. You can plan out any size of emergency fund that you would like. But make it a goal to get one started, even if it takes some time to fully fund it.
8. Find ways to better your career
One financial goal that you can consider is finding ways to better your career. Whether this is to go back to school, take some courses, or work towards a promotion, they can all help with your finances. When you get a better job, you will earn more money, and that is always a good thing for your finances.
9. Save for retirement
This is something that too many people wait too long to complete. They always assume that they have more time to do it later. And then retirement creeps up and before long, you only have a few years left to get ready and you are not prepared at all.
You need to take some time to save up for retirement ahead of time. Do not wait until the last minute. The earlier you can start, even if you can only put a small amount away each month, the better prepared you will be fore retirement later in your life. Sit down with a financial advisor and decide what you can afford to help you reach your retirement goals as soon as possible.
It is important to have financial goals in your life. They are simple and a key element to a healthy personal finance situation. They are all about coming up with some things that you would like to accomplish. You do not need to make any plans or come up with a step by step of what you want to do to reach them. With goals, you can dream big and decide what you want to do along the way.
Once you have a few important financial goals in place, you can then work on creating plans that will help you get there. Without these goals in place though, you will never have control over your finances and you can’t even get started on reaching them. Take a look at some of the goal examples above and see which one makes the most sense for your life.