Having goals for your finances is the key to success. Here are 8 goals you should have for your finances.
8 Goals To Have For Your Finances: You want to know how to get rich, but the problem is that you don’t know where to start. There are so many financial goals you can have, and it’s important to know them in order to ensure your success.
8 Goals To Have For Your Finances
If you ever want to become rich, make sure you pay attention to these important financial goals. Start Saving, ASAP: You don’t need to earn a lot of money or be in your 20s anymore to save for retirement. That said, starting early will help keep your costs down.
And ensure you’re maximizing employer-matching funds if you have them available. Know-How Much You Earn: Not only does knowing how much you make help you plan for what you can spend—and set aside for savings—but it also keeps you from being surprised by extra fees and expenses that pop up.
1) Start saving today
It’s never too early or too late to start saving. If you haven’t already, get into a habit of setting aside money each month in an emergency fund (this can be as little as $50 a month) so that you don’t have to rely on credit cards if something goes wrong. Next, start saving for short-term goals such as vacations or home purchases by putting aside money each month in either an individual retirement account (IRA) or 401(k). It may seem intimidating at first.
But consider starting small and increasing your contributions over time—for example, set aside $20 a week instead of $10 until it becomes an automatic routine. You could also try dollar-cost averaging, which means contributing equal amounts at regular intervals; when prices are low, you buy more shares; when prices are high, you buy fewer shares. This method helps average out costs and reduce risk.
2) Get Financially Organized
Whether you’re just starting out or building a new life after a move, getting financially organized is critical. Setting up a budget and creating an emergency fund will help you see where your money goes and identify areas for savings—and paying down debt can save you hundreds in interest payments each month.
There are plenty of resources available to help you get your financial life in order; CFPs, bank reps, credit unions, and more have all kinds of information on managing your money. The sooner you start getting organized, the less stress there will be when things don’t go according to plan. And when an unexpected expense comes up, at least it won’t come as such a surprise!
3) Pay your bills on time
There is no quicker way to make your credit score tank than by having your accounts go into collections. Take an hour a month and make sure you’re up-to-date on all of your payments, whether that’s credit cards, loans, or other bills. Additionally, don’t pay late if you can help it. If you have trouble paying something right away, call and negotiate with your lender for more time.
You’ll earn yourself some goodwill while improving your credit score. For example, be careful about opening too many new lines of credit. While it might seem like a good idea to spread out your spending across multiple cards in case one gets compromised, doing so could backfire and hurt your score. Try to limit how many credit cards you have open at any given time.
It’s best not to have more than three open accounts (excluding mortgages) at any given time—if you’re going over that number then look at closing down one or two accounts. That said, there are ways to build good credit without even using plastic. For example, get a secured card—where you put down cash as collateral against charges—and use it only when necessary.
4) Start Your Retirement Fund
Start saving for retirement as soon as possible. Most experts recommend starting at your first job by putting a portion of each paycheck into an employer-sponsored 401(k) plan, or something similar. If your employer doesn’t offer one, consider opening an individual retirement account (IRA) instead.
A Roth IRA has some nice tax benefits and can be opened easily online with most brokers. Many workers find it helpful to open and fund a Roth IRA in conjunction with their 401(k). Every little bit you save now will help make sure you don’t run out of money when you reach retirement age.
5) Build An Emergency Fund
Having a rainy-day fund will make it easier for you to handle unexpected expenses without going into debt. The rule of thumb for saving for an emergency is that you should have about three months’ worth of living expenses on hand. So if your rent, utilities, and other bills come out to $1,500 each month, save at least $4,500 so that you have cash reserves available in case of a job loss or other unforeseen circumstances.
One way to save is through auto-deposits into your savings account each month. As long as there’s something in there to tap into when you need it, building up an emergency fund won’t feel like such a hassle. And once you do have a healthy balance, try to keep it liquid (meaning not invested) so that you can access it quickly if necessary. And don’t forget: You can also protect yourself with life insurance. Life insurance pays out a lump sum after your death—it’s essentially an insurance policy against dying early.
This gives your family time to adjust financially before having to figure out how they’ll pay off all those debts and cover all those funeral costs. If you don’t want them having access to all of your money while they’re still alive, consider getting term life insurance instead—it’s cheaper than whole life insurance but only covers people who are already dead.
6) Pay off your debt
If you’re one of those people with student loans, car payments, or other big debts, it might seem like paying them off should be your top priority. That’s not necessarily true. Sure, getting out from under that debt is smart and will save you money in interest charges. But some financial experts argue that paying off your smallest debts first—the credit cards, for example—is actually a better way to build wealth over time.
And you may find that being free of those obligations makes it easier to pay down larger debts more quickly (and easier) than if you were still worrying about lower balances on more costly bills. Paying off your smallest debts first can help you avoid carrying multiple balances, which can make it harder to manage all of your finances. It also helps give you a sense of control over your finances by helping you pay off what are likely smaller amounts of money—often hundreds rather than thousands at a time.
The psychological boost could help spur you into action when it comes to tackling bigger tasks, too. Ultimately, though, if you have high-interest debt—like student loans or an auto loan—it’s worth starting there and working up from there. It doesn’t matter whether small-debt winnowing works best for you personally; just do whatever feels right in terms of progress toward becoming debt-free.
7) Give Back To Society
As you get older, people may start looking for donations of your time or money. This is your chance to get involved and help those in need. It’s also a great way to keep yourself motivated since giving back helps keep you on track with financial goals such as savings and debt reduction. Here are some ways you can give back 1.
Become an active member of a charity: There are many different charities out there that do everything from helping feed hungry children to providing shelter for animals. By becoming an active member, you not only contribute financially but also by volunteering your time and skillsets. If you don’t have any experience with fundraising or other charity work, don’t worry! You can still make a difference just by donating money instead of volunteering directly.
8) Save For Future Expenses
Saving for future expenses is about as basic as it gets when it comes to financial planning. We all know that money doesn’t grow on trees, and you will likely have tons of expenses over your lifetime (just think about how much college tuition costs these days!) Make sure you are setting aside money so that you have a good cushion for emergencies and future costs.
You don’t want to wait until an emergency happens—save now! Set up a high-yield savings account and put money in it each month! It may not seem like much at first, but your savings will add up quickly. An even better option is making use of employer-matching retirement plans, which basically means free money if your company offers them! This is definitely worth looking into if you haven’t already. The sooner you start saving, the more time your money has to compound and grow. Remember: Time in the market beats timing every time!
Also Read: 8 Financial Tips For When You Start A Family
Keeping these eight financial goals in mind should help you stay on track and make progress toward your financial future. And who knows? Maybe some of them will inspire you to dream up a few new goals of your own. If so, we hope that you’ll share them with us.
We want to hear from you! You can leave comments below or connect with us on Facebook, Twitter, and Google+. Also, if you have any questions about money management or other personal finance topics, feel free to ask us through our contact form. We love hearing from readers like you!
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