Everyone wants to be able to enjoy financial peace of mind, but achieving that goal can be difficult, especially when it seems like there is always a new financial fire to be put out. A medical bill or unexpected car repair can be enough to put you behind and make achieving financial stability seem like a dream. The key is to set certain goals and continue to work toward them even in the face of setbacks. The big questions then become: what goals should be on your list and how should they be prioritized?
This guide will help you take the first steps to setting important financial goals:
- Get out of debt.
Certain financial goals will vary according to where you are in life, whether you are married or have children, at what age you want to retire, etc. However, getting out of debt is the most important goal that should be at the top of everyone's list, no matter their age, income or amount of debt.
Getting out of debt means that you won't be spending your money on interest fees and you can actually begin putting your money to work for you. Instead of making monthly payments toward debt, you can use that money to invest and build wealth.
- Create an emergency fund.
Life is relentless and emergencies happen. Having an emergency fund will help you stay afloat during tough times and reduce the stress of having to deal with financial burdens in addition to other life events.
Building up an emergency fund is always a great way to begin to practice saving and budgeting. Once you feel comfortable with the amount in your fund, you will know how much money you can set aside each month to invest and meet other financial goals.
- Learn to focus on what you need and not what you want.
A lot of people have financial problems because they have made the mistake of associating their belongings with their self-worth. They develop an addiction to owning things, which can lead to overspending. Ultimately, it doesn't matter how much you make, it is all about how much you spend. Take the time to change your relationship with money and owning things so that you know the difference between what you want and what you really need.
- Start planning for retirement.
While your short-term financial goals might include taking a trip to an exotic locale you have always wanted to visit, you should think about contributing to your retirement before you start indulging. The earlier you begin contributing to retirement funds, the more time your money will have to go to work for you. Instead of making larger contributions later in life to try and make up for lost time, you can make smaller deposits into strategic investments now so your money is multiplying on its own.
Eliminating debt and beginning to build safety nets that will protect you in emergencies and help you build a solid financial future should be at the top of everyone's financial goals. Once you have these tools in place, you can begin to set other goals that might be a little more fun.
