Have you ever set a New Year’s Resolution, only to forget about it a few months later? If so, you may be wary of setting financial goals. But luckily, there are ways to set goals that you’ll actually be able to keep.
Here are some of the most common financial goals to have and some advice on making them work for you.
Check out our tips for how to set financial goals that are realistic and effective.
1. Find a Budget That Works for Your Lifestyle
Budgeting is the first step to achieving any of your financial goals. But if you’ve ever set a budget and thrown in the towel soon after, you know how important it is to set a realistic, effective budget that fits your lifestyle. Whether it’s the 80/20 budget, the envelope budget system, or zero-based budgeting, choose one that you’ll be able to stick to long term.
2. Get Out of Debt
From student loans to car payments to credit cards, debt can be one of the biggest hurdles to reaching your financial goals. So once you’re able to maintain a budget for several months, it’s time to tackle that debt.
If you have multiple forms of debt, choose to pay off the one with the highest interest first. Focus on paying at least the minimum payment each month—but aim to pay more if you have the means to do so. Then move onto the next loan until you’ve eliminated every form of debt.
3. Create an Emergency Fund
No one ever plans on having huge medical bills or needing work done on their car—yet these things happen to all of us, sometimes when we least expect it. For this reason, an emergency fund is one of the key elements of responsible money management.
Figure out how much money you need to take care of basic expenses for one month, then triple that number in order to have at least three months’ worth of savings for a rainy day.
4. Boost Your Credit Score
Having a good credit score isn’t just about bragging rights—it can actually save you a lot of money in the long run. Consumers with a good credit score get better interest rates and more favorable terms on loans, whether applying for a mortgage or buying a new car.
You can boost your credit score by making payments on time, making frequent payments, and by asking for higher credit limits. Review your credit card bills regularly and be sure to dispute any errors. You’d be surprised how often this can happen!
5. Plan for Retirement
It can be hard to think about retirement when you’re early in your career, but the sooner you start saving, the better off you’ll be when it’s time to retire.
If your company offers a 401(k), be sure to make monthly contributions. Some employers will even match your contributions, essentially giving you free money to put toward retirement. You can also set up an IRA or ROTH IRA to supplement your retirement plan.
Not sure how much to put away? Check out a retirement calculator to ensure you’re saving enough to live comfortably in the future.
6. Get Adequate Insurance
Many Americans are only one hefty medical bill away from financial turmoil. Fortunately, having proper insurance can give you peace of mind, even when unexpected emergencies come up. Review your insurance policies to make sure you have the coverage that fits your life situation—and to ensure you’re not paying for a policy you won’t use.
The average American should have the following types of insurance:
- Car insurance
- Homeowner or renter’s insurance
- Health insurance
- Life insurance
- Long-term disability insurance
- Identity theft protection
7. Consider Your Dreams
Financial goals don’t have to exclusively revolve around 401(k)s and student loans, so don’t forget to leave room for your dreams. Do you want to backpack across Europe? Buy a motorcycle? Start a business? Whatever your dreams are, set financial goals to help you get there. You’ll be more motivated when you’re saving money for something you’re excited about. Don’t forget to set small, time-sensitive goals along the way!
8. Figure Out What Makes You Happy
Maybe you’ve heard that money can’t buy happiness. And while the idea may be true in some respects, we believe money does have the power to greatly enhance your life—as long as you spend it in the right ways.
If you value having an impeccably clean house, you will probably get a lot of happiness out of making room in the budget for a regular house cleaner. On the other hand, you may feel like you should be saving for a vacation or nicer car. But if that’s not something that will truly make you happy, throw out the rules and think for yourself.
Reach Your Financial Goals Today
Ready to reach your financial goals? Lift Credit can help. Contact us today to learn more about how we can help you improve your credit score or get an affordable installment loan with no FICO credit check. Then check out our credit education tools for more tips on how to set financial goals you can keep.