Financial goals can turn your financial dreams into a reality. Goals can give you something to work towards and definite measures so that you know that you’ve reached them. But how can you set financial goals if you don’t know exactly what you should be doing with your money?
As someone who’s been in thousands of dollars of debt, I can tell you that all financial goals usually start with one goal: having more money. While having more money is a noble goal, you’ll still need smaller financial goals that can build you up to “more money status.”We recommend talking with an independent financial adviser like we did to learn how to manage your pensions and investments.
Here are some financial goals you should set to help you achieve the financial status you desire.
1) Lifestyle goals
According to a cpa before you go setting financial goals that look like everyone else’s, you need to create a vision for what you want for your life. Those lifestyle goals will dictate your specific financial goals and the action steps you will take to get there.
Everyone has different aspirations for their life. You may not want to live in a large home with expensive belongings as you accumulate more wealth — and that’s ok. You may prefer to live more modestly overseas and use the extra money to give to charity or start an online business — that’s perfectly fine as well.
Whatever you desire for your life’s “perfect picture” write it out and then let that vision guide you towards the best financial goals.
2) Money management goals
Most people think financial goals have to prioritize earning more money above all. Earning more money is important but if you don’t know how to manage it, then it will slip through your fingers.
The best thing you can do is figure out a money management system that will work for you. It should include covering expenses, saving money, paying off debt and building wealth. Read this article on Generating Alpha. What is it and Why is it Desirable? from Hawley Advisors.
All of these financial tasks can be encapsulated in a budget. You can use an app to create a budget or make one from scratch using a simple spreadsheet. You can also create a “digital envelope” system with various bank accounts to keep your budget categories separate.
Designate a money management system that works for you, then insert your financial goals in that system so you can meet them.
3) Dumping debt
We were once in over $120,000 of debt. In order to reach our lifestyle goals (we wanted to home school our kids,) we made a goal of getting rid of all debt right away. It took a while to pay it all but we eventually did and it’s allowed is to reach other financial goals, too.
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4) Credit score
Increasing your credit score can help you save thousands of dollars over your lifetime. When you have better credit, you’ll get better interest rates on loan, credit cards and other forms of borrowed money.
Related resource: Self Lender
A huge part of money management is tracking your spending. If you want to have more money to save, invest and accumulate as wealth, curbing your spending can be a great way to find extra money to do so.
Create spending goals in each area so you can be specific about what you want to accomplish. For example, my husband and I wanted to get our housing costs down to $0 and we eventually made that goal!
You can reduce your spending in other ways, too:
- Free and discount travel
- Free and discount clothes
- Lower housing costs
- Ways to Save Money on a Tight Budget
6) Income goals
If your overarching life vision is to live a certain type of lifestyle, it might require you to increase your income. Here are some income goals that you can set for yourself:
7) Side hustle goals
There are so many things you can do to make extra money. Here are some articles will help you find the perfect side-hustle:
- 15 Legit Work-from-Home Jobs Hiring Now
- Online Jobs for Mom who Want to Work from Home
- 19 Streams of Income You Can Start Right Now
- Apps that Pay You to Use Them
8) Passive income goals
Earning passive income is one of the best ways to increase your income. It’s one of those things that you “set and forget” while you are living life on your own terms. Here are some ways to earn passive income:
- Invest in real estate (you can even invest in real estate without owning property)
- Invest in the stock market
- Become a blogger or digital business owner
9) Salary increase
You can earn more money on your job in different ways. You can ask for a raise or work more hours to increase the amount of money you make each year.
10) Compensation increase
Making more money on your job can come in different forms like getting additional benefits. Check to see if your employer has an employee stock purchase plan, stock options or even a 401k (retirement plan) match that you can take advantage of.
Review your employer-sponsored retirement plans and stock option plans with a professional to make sure you are getting the most out of your investments. Track your retirement plan’s performance to make sure you are meeting your financial goals each year.
11) Take home pay increase
Examine all of the deductions that you have coming out of your paycheck. See what you can adjust to get more income each pay period.
You might be able to reduce the amount of income taxes you are paying by adjusting your federal and state W-4. If you update your withholding using the IRS withholding calculator. This calculator enables you to get the right amount of money taken out of your check so you either get a small tax refund or owe a small amount of money.
Also, you can check for payroll deductions like your health, dental and vision plans that are reducing your take-home pay. You may be able to find more affordable plans and reduce the amount of money being taken from your check for these items.
12) Savings goals
The great thing about savings is that it’s easier than ever with automated apps like Digit or Tip Yourself or Acorns. As the old saying goes, “Cash is king,” and you can almost never have too much of it laying around. Your savings goals can be a combination of having cash on hand and other cash equivalent assets like bonds. These savings are known as your liquid net worth.
Then, there are savings that can include securities like individual stocks, mutual funds and electronically traded funds (ETFs.) For now, let’s talk about cash savings.
13) Emergency fund
If you are getting out of debt, a $1,000 emergency fund should do. This will help you to stop depending on credit cards to fund emergency expenses like car or home repairs.
Once you’ve paid off all your debt, an emergency fund that covers 3-6 months of expenses is preferred. This way, if you suffer income loss due to job loss or a medical problem, your household can have what it needs to survive.
14) Sinking funds
These are savings goals that are dedicated to a specific item — usually a larger purchase that you don’t want to make with debt. For example, if you want another car or take a special anniversary trip, you can set up a special fund in a bank account or automated transfer to an online bank (i.e. not connected to your regular checking) to set aside funds for these larger purchases.
15) Investing goals
Investing can seem mysterious but technology has made investing for beginners almost a no-brainer. There are apps for investing that can automate the process and help you choose stocks that are in line with your investing goals.
16) Open an investment account
If you don’t already have any type of investment account earning money for you, then this should be the first step for you. The easiest investment account you have access to might be a 401k plan or an employee stock purchase plan.
If you don’t have an employer-sponsored plan, then you can check out investing apps like:
17) Learn more about investing
Though automation is great ways to get your investing started sooner than later, you’ll eventually want to understand how investing works. You can purchase a book or take an eCourse on investing to help you understand how to increase your returns.
18) Building wealth
Now that you’ve got a rhythm going with your saving and investing, it’s time to talk about building and preserving wealth. Preserving your wealth can be different based on your goals.
You may want to put your money in bonds at some point or begin to accumulate real estate holdings. Another way to preserve your wealth is to create a will to direct funds for your loved ones or causes you care about or both
You can work with a financial advisor to talk about ways to preserve your wealth when the time is right (usually sooner than later!)
19) Increasing net worth
As you build wealth, the only way you’ll know it’s increasing is by monitoring your net worth. I use a free tool called Personal Capital to do this. But you can also use spreadsheets to update the amount of your cash, securities, real estate and business holdings, valuables, and debts to arrive at your net worth figure.
20) Starting a business
You can increase your net worth and build more flexibility into your life by starting a business. The good news is that there are plenty of businesses you can start with little to no investment. If you’ve got a computer and an internet connection, then you can be a business owner!
You can choose to bootstrap a business with your immediate earnings, use savings or business credit cards to capitalize your business. If you decide to use credit cards, be sure to use only what you can pay off each month.
This is the oh-so-fun part of financial freedom! We really like giving, so we don’t leave it to chance. It is added to the budget like groceries and gas. You should do the same so you don’t miss out wonderful giving opportunities.
We are Christians, so 10% goes in for our tithe each month, then we reserve more for other things like birthday gifts and helping neighbors or local nonprofits. TIP: If you don’t have much money to give, think about time commitments until you can give money. Volunteering is a great way to give as well.
The days of working 30+ years then retiring might be all but over. These days, rapid wealth creation is possible with technology and a collective brain trust that helps us hack the ways to wealth at increasing rates.
Personally, my goal is to retire by the time I’m 40 and spend the rest of my days doing things I enjoy like writing and speaking. After all, if I make strides with my financial goals, early retirement should be totally doable.
Be bold and write down an early retirement goal that you can start working towards right now.
Financial goal setting can be exciting. When you write down goals, recognize them as a direction you desire, your life almost always automatically follows suit. By writing down these goals you are saying, ” I am ready to move on and do better.” You will find that this will help you do just that.
Want more ideas on saving, earning extra money and just getting your finances together in general? Check out my free guide, Money Hacks 101: 50+ Ways to Find, Save and Earn More Money.
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