Financial goals are a must if you want to succeed on your personal finance journey. In order to see results, you need something that will keep you motivated and remind you why you are budgeting and saving. Setting the right financial goals can be the perfect way to do that. Since the New Year is right around the corner, I thought I would help get you set up with some ideas for financial goals that you can set for 2019.
Goal 1: Building up your emergency fund
Building an emergency fund is one of the first financial goals you should strive to achieve. An emergency fund is a seperate savings account where you keep money in case of an emergency. This can be something like losing your job, having to do unexpected home repairs or a medical emergency. Of course, there are a thousand other situations in which an emergency fund can prove useful, and that’s why you need to have one. If you have already started one, I would urge you to do your best and get as close to the goal amount in 2019. This would usually be between 6-9 months of expenses. If you haven’t started one, that is the perfect goal for you for 2019. Make an emergency fund, and start adding to it.
Goal 2: Reduce your debt
Reducing debt is another way of making your life much easier and stress-free. For 2019, I want you to decide on an achievable but ambitious amount that you want to reduce your debt by and stick to it. Do as much as you can to hit this goal. Review it often, come back to it and remember WHY you’re trying to achieve this goal. This will keep you motivated to keep living responsibly and will give you a higher chance of achieving your goal.
Goal 3: Start saving for retirement
There are various ways to fund your retirement and it differs heavily from country to country. You can make IRA contributions, fund your 401(k) or funding your HSA account if your employer offers one. Of course, there are a bunch of other ways to do it. Depending on where you live, you should definitely do some thorough independent research on how funding retirement works in your country and also talk to your employer about it. The main point is that you are never too young to start doing this. When you start funding your retirement early, it will be much easier than trying to start at an older age.
Goal 4: Start saving 10% more of your income
Saving 10% more of your income will help you to reach your other financial goals much faster. You will have to cut some things out of your budget to be able to do this, but it will be very beneficial in the long term. Of course, you have to make sure that whatever you cut out is something that you’re able to live without. Maybe you can reduce your spending on several categories like eating out or the subscriptions you are paying for. 10% doesn’t sound like a lot but in the long term, it can make a huge difference.
Goal 5: Start investing a percentage of your income
With the income that you save, you can take a portion of it and start investing. It’s important for you to learn how to invest and in what, and practicing is the only way to truly learn. Make sure that you understand the basics first however. Read a book, take a course or talk to someone who you know is an experienced investor and ask them to teach you the ropes so you don’t put too much money at risk.
These 5 goals can significantly improve your financial situation in the long run. What better time to get started than the start of a new year? I’m open to any questions about what I’ve written here. Just email me at email@example.com