Setting goals can be an exciting and rewarding part of your financial life. But you might not always know exactly how to start or what benchmarks should look like. Here are some tips to help you set motivating, achievable financial goals.
Getting out of debt
If you have debt—whether student loans, an outstanding credit card balance, or something else—getting out from under it can be a helpful step to planning your financial future. With a deliberate plan, you can pay down debt and make space for other financial goals that are important to you, like buying a house.
To get started, consider the total amount of debt you have as well as what payments you can afford. Think about what moves you can make to get out of debt and make way for other financial goals. Can you pay a little extra toward your debts without sacrificing quality of life? Would it make sense to pay off high-interest debt first?
Building an emergency fund
Having an emergency fund can be a life saver. From everyday happenings like home, appliance, or car repairs to having a little extra money set aside for unexpected illnesses, time away from work, or other surprises, an emergency fund can come in handy.
If you’re not sure how to go about building an emergency fund, try looking at your budget and thinking about what it might make sense to cut. Also consider making automatic transfers from your checking to your savings—this way, you’re adding a little to your emergency fund every month without even having to think about it. With some small adjustments, you might be able to set aside a small amount each month to build up your fund gradually.
Planning a vacation
What’s your next vacation? Maybe you want to take six months off to travel the world or just spend a week on the beach during the summer. No matter what you want to do next, planning for it can be an incredibly motivating financial goal. To start, figure out how much your next vacation might cost. Then, try putting a bit of money away at a time, set a date for when you’d like to travel, and watch your dream vacation fund grow.
Saving for retirement
Getting your finances ready for retirement might involve many smaller financial goals along the way. You might commit to putting a certain percentage of your salary into your 401(k) every year or purchase a home that will generate passive income as a rental property. You might want to get a permanent life insurance policy like whole life insurance. In addition to a guaranteed death benefit, whole life insurance comes with a cash value that grows over time. You can borrow against the cash value for any reason, including to increase cash flow in retirement. This can be useful during market downturns and to manage taxes.
The primary purpose of permanent life insurance is to provide a death benefit. Using permanent life insurance accumulated value to supplement retirement income will reduce the death benefit and may affect other aspects of the policy.
Source: iQuanti
