This year may be halfway over, but there is still plenty of time for setting some financial goals that you can reach by the end of the year. Setting goals gives you an action plan and a path to succeed. You take a desire and convert it into something real. Even if you think you’re financially in good shape, setting short term and long term financial goals can help you get on an even better financial path.
1. Set a Realistic Monthly Budget
When you have a good income, pay your bills without issue, and even have enough left over for enjoyment, setting a monthly budget can feel like a drag. But sitting down and setting a realistic monthly budget is a smart decision. A realistic monthly budget lets you and your family know exactly what your family is working with. You’ll have a much more accurate number when it comes to setting long term financial goals, like building an emergency fund, planning for retirement, or getting out of debt. Once you’ve determined your budget, pay yourself first. Always make yourself, your family, and your future your number one priority. Decide on a set dollar amount or a percentage of your income and set that money aside for you first every month before anything else in the budget.
2. Get out of Debt
Setting financial goals becomes much harder if you are carrying debt. Getting out of debt – completely out of debt – gives you full control over your finances. You’ll have more control over your income, and have more money for saving, investing, and enjoying. You won’t feel as bound by your job, and it will relieve plenty of stress. Getting out of debt is completely doable. There are many ways to attack your debt. Even if you can’t eliminate your debt in the last few months of 2020, you can set a plan and be on your way.
This is a key short-term financial goal. If your monthly budget shows that you are spending more than you’re bringing in, you need to make adjustments before your situation gets out of control. If you are living on less than you earn, you’ll always be able to save for education, retirement, getting out of debt, and an emergency fund.
4. Build Your Emergency Fund
An emergency fund is one of the most important short-term financial goals you can set. An emergency fund will help when you’re facing job loss, a medical issue, or you need to address a major unexpected home repair. An emergency fund allows you to be prepared for the things you can't plan for.
An emergency fund can also be a long-term financial goal. Having that cushion will take away financial worries – movement in your investment accounts is less of a concern, confidence in your ability to save will grow, and financial anxiety will shrink. An emergency fund should cover a few months of your monthly budget, which is another reason setting a monthly budget is so important!
5. Plan for Retirement
Planning for retirement is an important long-term financial goal. Even if you love what you do, at some point you’ll want to enjoy your later years without the need for employment. You may think you still have plenty of time, but it’s important to start planning early. One of your financial goals in 2020 should be to figure out how much you’ve done to prepare for retirement, and how much you still need to do. Simply “saving” isn’t retirement planning. Talking to a financial consultant can get you on the right path. Most importantly, retirement planning is not about determining how much money you will need to save. It is the process of determining how much income you need based on the sources of income you will have combined with your income sources COLA’s (if any) and your anticipated retirement expenses. It is difficult to go-it-alone here. There are so many significant variables that have to be considered. Creating a retirement income plan, a GPS of sorts for your retirement, before you get there could help you live a happier, fuller life leading up to and into retirement.
6. Have Enough Insurance to Cover the Unexpected
Life insurance is a smart long-term financial goal. No one wants the unexpected, but if it does happen, it’s important to be prepared. The tricky part is finding the right balance of coverage. You don’t want to pay for too much, but you also want to have enough. Term life insurance is cheap enough where you can buy what you need. Looking at your monthly budget can let you know what you may need, and speaking to a financial consultant can help get you on the right path as well.
7. Stop Paying for Things You Don’t Need or Use
This is both a long-term financial goal and a short-term financial goal – in fact, this goal is key for all financial goals. Paying for things you don’t need or use has a parasitic effect on your finances. Is your home so full of “stuff” that you’re spending additional money on storage? Are you paying for memberships you don’t use? Any money you’re spending on non-essentials is money that isn’t working for you in a productive way. This isn’t saying you can never spend money to enjoy, but to look closely on what you’re choosing to pay for, and be selective. Things you pay for should at the very least be worthy of your hard earned cash.
Setting long-term and short-term financial goals can make the rest of 2020 a productive time of financial growth for you and your family. If you aren’t sure how to get started, contact Safe Money Partners to get your financial goal setting started right away.