Goal setting is an important part of life, but not always a fun one. Financial goals are some of the most important goals you should set, but they’re also some of the hardest to maintain. That said, no matter what you earn or how old you are, there are four financial goals that everyone should have.
Spend less than what you earn
One of the quickest ways to end up in debt is to live above your means. Creating a budget that ensures you are spending less than what you earn, rather than equal to or above your earnings, will mean you have money left over each month that can be used for emergencies, unexpected expenses, and for savings or when you’re ready to invest.
How to achieve it: Create a spreadsheet that sets out your monthly budget. Track everything you spend and all of your bills and calculate how much you are spending each month and where you could be cutting costs.
Pay off your debt
Debt makes it almost impossible to effectively save for the future as all of your money will go on paying off debt and the interest that builds over the years. Paying off debt is essential if you want to achieve financial freedom and if you want to save and invest money in the future.
How to achieve it: There are many strategies for paying off debts, such as the “avalanche method” and the “snowball method”. This list of debt repayment strategies is a great place to start if you’re committed to paying off your debts this year.
Maintain an emergency fund
Emergencies can derail our financial health if we’re not adequately prepared for them. Creating an emergency fund is an essential financial goal, especially as potential emergencies pile up when you buy your first car or your first home. Having a reserve of cash to fall back upon will give you a stronger sense of security and ensure that emergencies are easier to manage when they strike.
How to achieve it: A generic piece of advice is that your emergency fund should have three months worth of income in it. This is impossible for most of us to set up right away, but putting aside a small amount of income into a separate savings account means within a year or two you can have a sufficient emergency fund to hand should you need it.
Plan for retirement
Even if you’re young and you love your job, planning and saving for retirement is essential. One financial goal that many have is not only to plan for retirement but to try to save for early retirement. And if you have kids, then you should also set up an online savings plan for them at The Children’s ISA so you don’t have to worry about their finances in the future. This means you’ll have additional time should your retirement savings hit any problems along the way and you’ll be prepared should you need to retire early because you or a family member are in poor health.
How to achieve it: In addition to paying into any pension plan that your employer offers, go now and open up a gold IRA that you can pay large amounts into several times a year. By setting this up sooner rather than later, you can front-load your retirement funds and be fully prepared for the future.
