There is a lot of talk about budgeting, cutting spending, and living within our means. We know we should be saving money, but what are we saving it for?
Last week I completed an exercise for a course that asked me to brainstorm my goals for the next three years. It then asked me to estimate how much those goals would cost and how I would need to adjust my current income and budget. I made me realize the importance of setting clear financial goals alongside our personal ones.
There are many different goals you may want to save up for. Take a look at your long-term and short-term goals and have an open discussion with your family about what your priorities are.
Here are 10 ideas for financial goals to work towards:
1) Emergency Fund
Dave Ramsey fans know the importance of having a financial reserve in case unexpected expenses arise. He recommends saving at least $1,000 in addition to 3-6 months of living expenses.
2) Paying Off Debt
No one likes having debt hanging over their heads, be it credit cards, car payments, or student loans. Becoming debt-free is a goal of many.
3) Buying a Home
Whether it’s saving up for the down payment on your first new home or upgrading to a better one, investing in a new home is a reward in itself.
4) Saving for Retirement
The earlier you start saving for retirement, the longer your account has time to grow. Do some research on potential retirement accounts and start adding to them a little at a time. A financial advisor can help you determine how much you’ll need to save to live the retirement lifestyle you want.
5) College or Private School
If you want to be able to provide financial assistance to your kids through private school or college, start putting aside savings towards their education. Work with an advisor to estimate how much they’ll need and the best accounts to open.
6) New Car
It’s exciting to drive off the lot with a new car, and even more so if you can pay it off in full. Research the car you want ahead of time and start setting aside funds.
Whether you want to travel the world or just take the family to Disney World, setting aside funds lets you know you can enjoy yourselves within a clear budget that won’t break the bank.
8) Large Purchases
Are you looking forward to redecorating your home? Have a hobby you’d like to invest in? Save up for your large purchases instead of putting them on your credit card.
Have you always wanted to make a large donation to your favorite cause? Perhaps your goal is to make annual contributions to several organizations.
10) Starting Your Own Business
Setting up a new business typically involves a financial investment. If one of your dreams is to be your own boss, this may be a priority for you.
Your goals will likely be a combination of the types listed above. However, the following goals should be included in any financial plan:
- Become Financially Literate – Learn more about personal finance so you are better prepared to make decisions for your family.
- Get Focused With Your Spending – Set up a budget and stick to it so you can put any extra funds towards your goals.
- Plan for Life’s Twists and Turns – Make sure you have your insurance policies in order and plan ahead for potential emergencies.
Money is a tool that gives us the freedom to pursue our dreams. It’s up to us to decide how best to use it. So when you’re setting up your goals for the year, be sure to include these options in your plans.