When we counsel people to better manage their personal finances, a primary concern is helping them set good financial goals. Examples of financial goals can be a useful way to help spur someone’s imagination.
Everyone’s priorities are different, so take most suggestions we make as just that—suggestions. Take our advice and customize it to your own unique situation.
Financial Goals Examples:
- Emergency savings fund. This is a crucial goal we set for every consumer we counsel. Remember above where we said to take our advice as merely a suggestion? Forget that. This goal is the first one you should set, regardless of your situation. Now, how much you save toward an emergency savings fund will vary depending on your income and needs. Our standard advice used to be to save 3 months’ income for emergencies. However, one common emergency that draws on emergency funds is job loss, and statistically, it takes an average of nine months to find a new job after a layoff. So one’s goal should be to save 9 months’ income to help them survive a period of joblessness.
- Pay off debt. This is one of the most common goals our clients come to us to achieve. And it is achievable, no matter how dire things may seem. We’ve helped millions of consumers work toward financial freedom and every day, thousands of consumers pay down their debts using our nonprofit service. Besides making diligent payments, the best way to make real progress toward this important goal is to stop borrowing. If you don’t add to your debt, paying it off becomes inevitable.
- Retirement. This is something almost everyone does without thinking. The “not thinking” part is a problem. We encourage people to create a financial plan, really think about their retirement needs, and save accordingly. If you’re young and your employer offers matching contributions to a 401(k) or other retirement plan, you simply must take advantage of that offer. If you don’t do so, you’re leaving money on the table. Remember, the earlier you start, the better off you’ll be in the end, and the less you’ll have to set aside along the way.
- Homeownership. Many clients come to us for pre-purchase homebuyer education. Saving up a sizeable down payment is the best way to enter homeownership; it helps you get a home loan more easily, and if you save enough, you can avoid the cost of PMI (Private Mortgage Insurance), which will save you even more money.
- Auto purchases. Too many people see a monthly car payment as a given. As soon as they pay off an auto loan, they’re off to the dealership to trade in their car for a new one—and a new debt. We say keep driving that paid-off car while you save for the next one. Make it your goal to pay for your next car in full, without borrowing at all.
- College. Another popular savings goal, saving for an education is essential to avoid huge student loan debt. We’ve offered advice before on how to use a college savings calculator to build your 529 plan.
- Fun. So many of these goals are big, long-term things that responsible adults should save toward. But it’s also good to save toward things you enjoy. Vacations, a big-screen TV, a boat, or any other purely fun thing are worthy financial goals. Examples like this might not seem like something we would advise, but the truth is, even a purely recreational financial goal is great as long as one isn’t using credit card debt to pay for it. If you work hard and save diligently, you deserve to reward yourself with fun savings goals.
If you have no shortage of good financial goals but don’t feel like you’re making any progress toward them, check out the Sharpen Your Financial Focus™ program. It starts with the MyMoneyCheckUp™ stress test—a financial self-assessment tool that can help you improve your finances right away.
Then feel free to talk to one of our certified nonprofit financial advisors. Counseling is free, and we’ll help you create a budget and action plan to achieve all of your goals. If you need a debt management plan to pay off credit cards, that can be a great way to free up income to set aside for the future. And don’t forget our FIT Academy, which is full of free educational resources, including financial workshops.
