You can always find effective ways to spend your money when you set good financial goals. When your major expenses are tied to certain financial goals, it’s easier to understand where a huge part of your income goes.
Moreover, if you lack insight into how to handle your financial goal-setting, you are likely to make wrong money choices in the future. Whether it’s a long-term or short-term goal, you must create a feasible plan or strategy for accomplishing it.
In this post, we will examine the simple step-by-step process for achieving financial goals successfully. We’ll also delve into examples of some of the good financial goals you can start chasing this year.
What Are Financial Goals?
Financial goals are important things you need to spend money on to maintain your lifestyle. These goals are usually divided into short-, medium-, and long-term objectives. Since financial goals tend to cost a significant amount of money, it’s important to plan for them properly.
Why Are Financial Goals So Important?
Setting good financial goals is important because the outcome of some of these goals can improve the state of your finances and bring about some sense of fulfillment in your life.
If you don’t deliberately set financial goals, you may never spend your money wisely, let alone make investments to secure the future.
What Are Some Good Financial Goals?
Some good financial goals can include signing up for a retirement plan, paying off a mortgage, or starting a business. Basically, goals like these will help you attain financial freedom before or when you retire.
You can also set financial goals such as buying a new car or traveling for a vacation. However, these goals are liabilities.
How To Set Realistic Financial Goals
If you aren’t sure where to start with setting a financial goal, here’s a 5-step guide to help you get started as soon as possible:
Think About Your Short And Long-Term Future
It’s pretty difficult to set financial goals if you haven’t envisioned the kind of life you want for yourself in the future. You should aspire to achieve certain goals in 5, 10, or 20 years. Once your mind is fixed on this, you can identify the specific objectives you need to achieve to create the kind of life you want.
Categorize Your Financial Goals
When you create a list of financial goals you want to achieve, you need to categorize them. Mind you, there are three major categories; short-term, mid-term, and long-term. A long-term goal would certainly require more hard work, commitment, and ultimately more money for it to be achieved.
Short-term goals, however, won’t demand this much effort from you. Short-term goals are usually from 6 months to 5 years. You need to determine the kind of financial goal that is set before you.
Set A Target Date
Specificity is key when setting good financial goals. You should be able to specify a target date for your goal to be achieved. This would help you focus on your savings within that set period of time. If there’s no specific date or time frame for your goals, you may never be motivated enough to chase after them relentlessly.
Prioritize Your Financial Goals
As much as you may be encouraged to pursue multiple financial goals simultaneously, you need to prioritize them in order of importance.
For example, if you have a short-term goal to build an emergency fund and another goal to change your car (which is still running fine), common sense would prompt you to focus on the emergency fund before anything else. After building your emergency fund, you can start working on another savings goal for your car.
Develop A Savings Plan
Let’s say you have decided on which financial goal to pursue and have estimated how long it would take to achieve it; what’s left is developing a viable savings plan. This is where the major work lies.
For instance, if you want to make a down payment of $20,000 for a house you want to purchase within two years, you would have to make a monthly payment of $1,041. Now, this is a 2-year payment plan you must stick with in order to achieve your goal.
Depending on what your financial goal is specifically, it’s important to come up with a payment plan that’s convenient and not detrimental to your financial situation.
10 Examples Of Financial Goals To Achieve This Year
If you can’t fixate your eyes on a specific financial goal, here are some amazing examples of financial goals you can achieve this year:
1. Choosing A Retirement Plan
Planning for retirement is one of the most important financial steps to take. This is not even dependent on whether you are rich or not. Everyone, regardless of their financial situation, must develop a retirement plan for the future. It’s the only way to fund and maintain a comfortable lifestyle by the time you stop working as a senior citizen.
Let’s say you intend to retire in the next 2 decades; you need to start saving a certain amount of money from your paycheck every month. Create a high-yield savings account where you’d build this retirement fund. This is how you increase financial security and have a good life even after your career.
2. Planning A Vacation
Sometimes, a vacation could be the best opportunity for you to spend quality time with your family and create beautiful memories. However, if you don’t make this a financial goal by developing a plan for achieving it, you would never hop on a plane on any vacation.
Just as you save money to actualize other money goals, you also need to layer in a savings strategy when planning a vacation. Aside from the financial preparations, it’s important to do some research. Learn more about the travel and accommodation costs, food, sightseeing, and other activities to spice up your vacation experience.
3. Paying Off Student Loan Debt
If you ever sought student loan programs to attend college, this should be one of your top financial goals. You need to pay off all the accumulated debt as soon as possible, otherwise, you’d spend the rest of your life struggling to repay what you owe.
Ensure you set a financial goal to complete the student loan debt repayment within the given period of time. If you can pay this off completely, you will have the financial freedom to pursue other good financial goals before retirement.
By the way, if you need helpful strategies for paying off student loans, here are 9 quick ways to pay up as soon as possible.
4. Settling Credit Card Debt
Millions of Americans are in credit card debt, and most of them are usually struggling to clear up their balances every month. This can be a very tough financial situation, especially when you allow your credit card debt to pile up.
The first step to paying off credit card debt is not adding any more debt. Stop using credit cards. Purchase items using cash or your debit card. The next step is to determine how much you can repay every month. As long as you are no longer increasing your balance, your monthly payments would go a long way, and you’d eventually pay it off completely.
5. Buying A House
This is another good example of a financial goal. Consider saving money to afford your own home before you retire. You shouldn’t pay rent every month for the rest of your life. In fact, getting your own home is another way to prepare for retirement.
Also, buying a house gives you the opportunity to choose your prepared area of residence. If you intend to live in a downtown area, you should be saving to purchase a condo or a townhouse.
If you prefer to live in a quiet neighborhood, you might want to consider buying a house in a suburban area. To buy a home, financial advisors recommend creating a budget that accounts for mortgage payments, domestic repairs, and other regular expenses without restraining your daily financial requirements.
6. Starting A Business
If you aren’t comfortable working a white-collar job, you should start your own business. But before launching a business, you need to be certain that you want to be an entrepreneur. Entrepreneurship is usually filled with ups and downs, and it takes a great level of commitment and focus to pull through as a business owner.
Mind you, you need capital to start any business. Saving money to get your capital is the financial goal in this case.
7. Paying For College Education
If you desire to earn another college degree at some point in your life, you need to make it a financial goal. College tuition costs a significant amount of money, depending on the institution of study.
You have to be well prepared before accepting admission into the school. If it would take 5 years to gather enough money to fund your college education, then you should patiently save the money within that period of time.
On the other hand, you can choose to be a part-time student so you can have some time to still work and earn money.
8. Building An Emergency Fund
Building an emergency fund is one of the good financial goals one must look forward to achieving. It’s important to build a financial wall to protect your income from emergencies.
Natural disasters, critical illness, economic downtown, or job loss never come with warnings. You can wake up one morning and find yourself facing these challenging emergency situations.
A perfect way to prepare yourself is by setting up an emergency fund that can cater to your bills for at least 3 months. This should be included in your savings goals. As soon as you receive your paycheck, a certain amount of money should be transferred to your emergency fund.
9. Finding A Higher-Paying Job
Sometimes, one of the best goals for personal finance is to find a job that pays you a good amount of money. Aside from advancing your career, you also need to improve your financial situation. If your current job isn’t paying enough money to settle your bills and plan for your financial goals, you need to find another job as soon as possible.
Pending when you can find a higher-paying job, you could work extra shifts or work multiple jobs. The goal is to make more money every month, so you can comfortably fulfill your financial obligations.
10. Attaining Financial Freedom
Financial freedom is a situation where you can use your financial resources without worrying about going broke. It takes a long time and a lot of hard work to gain financial freedom. However, bear in mind that it’s achievable. You can start chasing financial freedom by investing your hard-earned money in stable and reliable ventures that guarantee good returns.
You don’t always have to buy into real estate or stocks to invest your money. There are other ways to invest wisely by being a part of an investment fund, keeping cash in a high-yield savings account, or simply investing in a legitimate profitable business.
Final Take On Good Financial Goals To Achieve
Now that you have examined some good financial goals to achieve, you should have direction as to where to invest or spend your money wisely. However, achieving a financial goal won’t be possible if you don’t create a budget, track your spending, and anticipate future expenses. These are common effective ways to stabilize your income.
More importantly, ensure you have a reliable source of income. Without money, you cannot fund your goals.
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