Smith 
I’m a bit of a goal-setting enthusiast. While many folks make New Year’s resolutions, I believe in revisiting your goals more frequently, and studies back me up since 91% of resolutions fail every year. Personally, I review my goals every 90 days. Some don’t set goals at all and rely on luck, consciously or not.
First, let’s agree that goals are more substantial than dreams or wishes. They start as dreams but need an action plan to become real.
What Are Financial Goals?
Financial goals are targets for your financial well-being, both short-term and long-term. They can range from saving for retirement, getting out of debt, building an emergency fund, to increasing your net worth or investing in the stock market. These goals vary based on your income, current debts or assets, life stage, and priorities and are key to achieving financial freedom and stability.
1. Have a Well-Stocked Emergency Fund
An emergency fund might seem like a short-term goal, but its long-term benefits make it essential. With a strong emergency fund, you can reduce financial stress, manage sudden expenses like job loss or medical bills, and avoid tapping into long-term investments. It also helps you stay calm during market fluctuations since your immediate survival isn’t at risk.
2. Get Out of Debt – Completely
No matter your income, getting out of debt is crucial. All debt eventually hampers your finances, even a mortgage. Being debt-free gives you control over your income, more money for savings and investments, and reduces financial stress. Before my career, I had over $20,000 in student loans and credit card debt. With my wife’s support, we aimed to be debt-free and achieved it by sticking to our goal for over ten years. Debt can prevent you from attaining financial goals, so consider options like 0% APR balance transfer offers to consolidate and pay off high-interest debt.
3. Plan For Early Retirement
Even if you love your job, planning for early retirement is wise. It may take longer than expected, and unforeseen circumstances like health issues or family needs might require you to retire early. Starting early gives you a larger retirement fund sooner, easing the saving burden later. Opening and maxing out a Roth IRA and contributing significantly to a 401(k) are good practices.
4. Create Multiple Income Streams
Even if you like your job, having alternative income sources serves as financial insurance. Multiple streams can aid early semi-retirement, fund a business, boost retirement savings, or pay off debt. My journey in creating multiple income streams involved several attempts, including real estate, leading me to start my blog, which now generates substantial income.
5. Have Enough – But Not Too Much – Insurance
Balancing your insurance coverage is crucial. Stick with affordable term life insurance, opt for the lowest necessary auto insurance, and consider high deductibles on health plans, covering the difference with your emergency fund. Regularly reviewing your insurance needs with an agent ensures you have adequate but not excessive coverage.
6. Live on Less Than You Earn – No Matter What
Living below your means is vital, providing funds for savings, investments, and debt payments. While increasing income is good, spending less ensures surplus for future financial security.
7. End Any Addiction to Stuff
If you’re addicted to accumulating stuff, it’s a financial parasite. It ties up money without benefiting you financially and requires more space and maintenance, distracting you from more productive pursuits. Simplifying your possessions can shift focus to meaningful life changes.
8. Do Work You Love
Improving your finances should lead to independence, allowing you to do what you love. Debt-free living, early retirement plans, multiple income streams, and living frugally can help you pursue fulfilling work, even if it pays less. Work satisfaction leads to a better quality of life.
9. Share Your Good Fortune
Sharing your wealth with those less fortunate should be satisfying, affirming your control over money. Giving can be fulfilling, connecting you to the community, and potentially bringing back benefits in different forms.
10. Leave Your Financial House in Order
Ensure your financial affairs are in order to benefit your loved ones after your death. This includes having adequate insurance, clearing debts, considering estate taxes, communicating your plans with loved ones, and setting a good financial example.
Why Are Financial Goals So Important?
Setting financial goals helps you plan for the future, allocate resources wisely, and stay motivated. They provide a sense of purpose, helping you achieve financial stability.
What Are Some Examples of Good Financial Goals?
- Saving for an emergency fund
- Paying off debt
- Saving for a down payment on a home
- Saving for retirement
- Planning for children’s education
- Building an investment portfolio
- Creating a budget
However, these goals need to be specific to be effective.
What Is a SMART Financial Goal?
SMART goals are specific, measurable, attainable, relevant, and time-bound.
- Specific: Clearly defined, like saving $10,000 for a down payment in 5 years.
- Measurable: Trackable progress, such as contributing $200 monthly to retirement.
- Attainable: Realistic, like paying off $5,000 debt in 12 months.
- Relevant: Important to your personal values, like improving credit score.
- Time-bound: Set deadlines, like saving $2,000 for a vacation in 18 months.
In conclusion, setting SMART financial goals is vital for financial success. They provide a clear roadmap to achieve your objectives, be it building an emergency fund, paying off debt, or growing investments. By working towards these goals, you can secure a stable financial future. So, when did you last revisit your financial goals?
