Setting Financial Goals: Shape Your Future
Your financial goals may be big or small and practical or fanciful, but all have one thing in common – they can shape your future for the better. Part short-term checklist and part long-term strategy, financial goals should evolve over time as you reach various milestones and your life changes.
So what’s the best way to begin the journey to fiscal freedom? By getting a clear idea of where you are, where you want to be, and how to get there. Spend some time listing your financial goals, from practical concerns to big dreams, and then consider the path you need to take.
Start with the basics
When it comes to financial goals, getting your basic finances in order should be first priority. Here are some fundamentals that should top your financial goals to-do list:
- Emergency savings: Most financial advisors recommend saving 3-6 months of living expenses and keeping those funds in safe and accessible investments, such as certificates of deposit (CDs). Consider initiating an automatic, recurring transfer from your checking account to savings each month in a set amount that your budget will allow.
- Debt elimination: If you’re carrying credit card balances or other high-interest debt, commit to eliminating these burdens. Some financial planners recommend a “debt snowball” – listing your debts from smallest to largest and then committing to paying each account off, one by one, until you’re debt free.
- Retirement planning: It’s never too early or too late to plan for your future. Many employers will match a portion of your contributions to a company-sponsored retirement plan, so it’s smart to take advantage of what is essentially free money. An investment advisor can recommend what retirement strategy is right for you, from standard IRAs to Roth IRAs and more.
Once you’ve conquered these goals, you can move on to other priorities, from putting away for kids’ educational expenses to saving for a down payment on a home or even paying off your mortgage early. Setting financial goals for your future is a constantly evolving process that requires discipline and perseverance, but also comes with immeasurable peace of mind and rewards.