When it comes to being financially secure, one of the most important things you can do is set yourself some financial goals to strive for. Why? Well, when you don’t have anything specific to put your effort towards, things may go a little off track. Maybe you end up spending more than you should, based on your income, maybe you aren’t able to save money effectively, or maybe your financial situation generally remains stagnant (or gets worse). And what happens when you get to the stage in life where you start to think about retiring? Or what if you run into a financial emergency? Will you have money saved for either of these eventualities?
When you plan ahead, you may be able to give yourself a better chance to effectively deal with whatever comes your way and set yourself up for your future. But where do you start? To that end, we’re going to run through some short and long term financial goals examples that you should consider moving forward.
1. Build a Budget
No matter what financial goals you set for yourself, you’ll likely have a hard time reaching them without a proper budget in place. A budget is going to give you important insights into your financial situation, like understanding how much you’re spending, where you might be able to cut back, and can help you to organize your finances in general.
So, if you’re not using a budget, take some time to learn about different budgeting methods and try to find something that you’re well-suited to. You can consider things like:
You can also look for apps that’ll help you build a budget and keep track of your spending.
2. Start an Emergency Fund if you Don’t Have One
If an emergency expense comes your way, will you have the money to deal with it? For a lot of people, no matter how big or small the cost may be, the resounding answer is no. The problem is, if you’re living on a tight budget and don’t make an active effort to plan ahead for these types of situations, the problem isn’t likely to fix itself.
So, the best thing you can do is to build an emergency fund, or make a more concerted effort to contribute to it regularly if you already have one. This can sometimes be a challenge if you don’t have a ton of room in your budget, but just remember that every little bit counts. No one expects you to build a fully stocked emergency fund overnight, so just do your best to contribute as much as you’re able to on a regular basis and try not to neglect this important financial goal.
3. Cut Back your Spending by at Least 10%
Like we mentioned, one of the main goals of working with a budget is to gain insights into your spending habits. By doing this, you may be able to find ways of cutting back on your spending. Start by looking for any problem areas, or spending categories that you think would be relatively easy to cut back in. For example, maybe you can cancel any unused subscription services, or maybe you can be more diligent with your grocery spending. Whatever it is, set yourself an amount you want to cut back on so you have a specific target to aim at and achieve this financial goal.
4. Pay Off your Debt
Maybe you’ve made half-hearted attempts to pay off debt in the past, but if you’ve been struggling, it might be time to make it a priority. Again, you’ll need to return to your budget to find the room you need to pay down your debt, which might be a challenge if money is tight and you’re trying to balance different financial goals. If that’s the case, you may need to park your efforts in one area to devote your time to another. You’ll need to prioritize what you think is your most immediate need, although getting out from under your debt payments is usually a good idea.
Once you’ve managed to pay off your debt, you’ll want to make sure you implement healthy financial habits to avoid finding yourself in the same position in the future.
5. Start an Education Fund for your Kids
We all know that a post-secondary education doesn’t come cheap, so if one of your long term financial goals is to send your kids to college, it’s a good idea to start saving as soon as possible. By doing this, you may be able to help reduce the student debt that they’re left with once they graduate.
6. Save for your Retirement
While your retirement may be a long way off, it’s never too early to make saving for it one of your primary long term financial goals. After all, saving this amount of money is going to take time, so you’ll want to start as early as possible.
While you may have other short term priorities, try to set a certain amount aside consistently, and increase this amount when you have the room in your budget to do so. Another thing you’ll want to keep in mind is that if your employer has any sort of benefit matching program for your retirement fund or otherwise, you’ll want to make sure you take advantage of it.
7. Save up for a Down Payment
If you have dreams of buying a new home at some point down the road, you’ll want to start saving up for a down payment as soon as possible. Remember that in general, the bigger the down payment you put on a house, the less interest you’ll need to pay on your mortgage in the long run. On top of that, having the money for a large down payment can help you to secure funding in the first place.
8. Pay off your Mortgage
On the other hand, maybe you’re already living in a home you own and have no intention of moving any time soon, or at all. If that’s the case, you’re in a good position! Instead of gearing your financial goal around saving up for a down payment, you can instead focus on paying down your mortgage.
First, you should make sure that you won’t be penalized for making any extra payments outside of your scheduled mortgage payments. Assuming you won’t be, try to devote any extra money you may have to making an extra payment on your mortgage.
9. Put Money Away for a Large Upcoming Expense
Do you have any major events coming down the pipeline? Maybe you’re getting married in the next couple of years, or maybe you’re hoping to take the family on a big vacation. Whatever the case may be, spend some time to figure out how much this event is going to cost you and make saving up for it one of your financial goals. Once you know how much you’ll need to save in total, you can break it down into smaller amounts and incorporate your savings into your budget.
10. Monitor the Health of your Credit History
Your credit history is one of the most important parts of your financial profile. Your credit score can play a big role in things like applying for a personal loan, how much interest you get charged on this loan (in some cases), and more. Because of this, you’ll want to make sure you make checking in on your credit score regularly one of your financial goals.
You should also take the time to check your credit report a few times a year (which you can do for free through the three major credit bureaus) so you can get a better idea of what might be impacting your credit score. This can also be a good opportunity to look for errors on your credit report or signs of identity theft.
You might be looking at this list, wondering how you could possibly manage to strive to meet all these financial goals. There are two important things to remember here. Firstly, no one expects you to accomplish any of these things overnight. Setting financial goals doesn’t mean that you have to reach financial stability right away. It’s about having an end point to guide your efforts over a long period of time. Sure, you’ll want to set short term financial goals that you might hope to accomplish sooner rather than later, but in general, your efforts are likely going to be a lifetime pursuit.
Secondly, a lot of these financial goals work in tandem with one another, so by focusing on one, you can help to accomplish another. For example, by trying to reduce your spending by 10%, you can open up room in your budget to focus more attention to paying down debt. Or by learning more about your credit score and what may impact it, you can start to incorporate better financial habits into your life that could help you reach your savings goals. Whatever financial goals you end up focusing on, just do your best to stay focused, be diligent, and cut yourself some slack as you work towards them. Everyone makes mistakes, so just do your best to keep your eye on the prize!
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