Financial Goals: Achieving Long-Term Success
When it comes to placement of financial goals, it is often a personal process. Your wishes may differ from those of other people. You might want to buy a house, for example, while someone else might want to rent and save a huge travel fund.
While goal setting should be done on an individual basis, there are three financial goals that almost everyone should strive to achieve. Let’s delve into what they are and how they can lead us towards a financially secure future.
1. Get out of debt
Debt compromises your financial freedom. Everyone should aim to pay off their debt as soon as possible. If you have debt, you will have a monthly payment that you commit to making. As long as that payment exists, your income won’t be yours, and you’ll have less available for other financial goals. Plus, you’ll also pay interest to a lender, which is money you simply lose because it goes to making your lender richer instead of helping you achieve other financial goals.
Some debts, such as credit card debt, should be prioritized due to their high interest costs. However, it may not make sense to pay off low-interest debts upfront, such as a mortgage, as you can often get a better return on your money by investing it. However, even if you’re not paying extra towards your debt, your long-term goal should still be to own your assets outright and not owe anyone money. This is a critical step towards eventual financial freedom since you cannot be free while still indebted to others.
2. Save enough for retirement
Saving enough money for retirement is another crucial goal that everyone should achieve. In the end, everyone will have to stop working, and when they do, they will need money from a brokerage account or other investment account to live off of.
Social Security retirement benefits are only meant to replace about 40% of your pre-retirement income. It is virtually impossible to maintain a similar standard of living to what you are used to while reducing your income by 60%. You’ll typically need at least 80% to 90% of your pre-retirement income to live a comfortable senior life, so about 40% to 50% of it needs to come from savings.
To calculate how much to save for retirement, you can assume you will need about 10 times your final salary invested. You can figure this out by taking your current salary and adding a 2% increase from now until your expected retirement year. Then multiply that number by 10 to see how much you’ll need. From there, you can use the Investor.gov calculator to determine how much you need to save each month to reach your goal.
If you achieve this goal and save enough for your future, you will be able to enjoy your golden years without financial worries. This is something everyone should aspire to.
3. Have a three to six month emergency fund
Finally, the last goal that everyone should try to achieve is to have an emergency fund with three to six months of emergency expenses. Emergencies can happen to anyone, and having an emergency fund can turn these financial shocks from a crisis into a mere annoyance as you have the money to pay for them.
To make sure you have enough emergency savings, open a high-yield savings account and set up automatic transfers every month of the amount you can afford. You can also save windfalls like tax refunds or cash birthday gifts until you’ve saved three to six months of expenses.
By achieving these three milestones, you will be on your way to a financially secure future. Start working towards them today!
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Summary:
Placement of financial goals is a personal process as everyone’s wishes may differ. However, there are three financial goals that almost everyone should strive to achieve: getting out of debt, saving enough for retirement, and having a three to six month emergency fund. These goals are essential for long-term financial success and security.
Debt compromises financial freedom, so paying it off should be a priority. Saving enough money for retirement is crucial to maintain a comfortable lifestyle in our senior years. Additionally, having an emergency fund can provide a safety net for unexpected expenses.
By achieving these goals, individuals can achieve financial freedom, a secure retirement, and the ability to handle financial emergencies. It’s important to start working towards these goals as early as possible to ensure a brighter financial future.
Remember, when it comes to financial goals, it’s essential to set individual targets based on personal circumstances and priorities. Seek professional advice if needed and stay committed to achieving these milestones.
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Placement financial goals it is often a personal process. Your wishes may differ from those of other people. You might want to buy a house, for example, while someone else might want to rent and save a huge travel fund.
While goal setting should be done on an individual basis, there are three financial goals that almost everyone should strive to achieve. That’s what they are.
1. Get out of debt
Debt compromises your financial freedom. Everyone should aim to do this pay off their debt.
If you have debt, you will have a monthly payment that you commit to making. As long as that payment exists, your income won’t be yours and you’ll have less available for other financial goals. Plus, you’ll also pay interest to a lender, which is money you simply lose because it goes to making your lender richer instead of helping you achieve other financial goals.
Some debts you should try to pay off right away because the interest costs are so high credit card debt. Others, it may not make sense to pay upfront, such as a mutual at a low rate as you can often get a better return on your money by investing it.
But even if you’re not paying extra towards your debt, your long-term goal should be to own your assets outright and not owe anyone money. This is a critical step towards eventual financial freedom since you cannot be free while still indebted to others.
2. Save enough for retirement
Saving enough money for retirement is another crucial goal that everyone should achieve. In the end, everyone they will have to stop working, and when they do, they will need money from a brokerage account or other investment account to live off of.
You see, Social Security retirement benefits are only meant to replace about 40% of your pre-retirement income. It is virtually impossible to maintain a similar standard of living to what you are used to while reducing your income by 60%. You’ll typically need at least 80% to 90% of your pre-retirement money to live a comfortable senior life, so about 40% to 50% of it needs to come from savings.
To understand how much save for retirement, assume you will need about 10 times your final salary invested. You can figure this out by taking your current salary and adding a 2% increase from now until your expected retirement year. Then multiply that number by 10 to see how much you’ll need. From there, use the Investor.gov calculator to see how much you need to save each month to reach your goal.
If you achieve this goal and save enough for your future, you will be able to enjoy your golden years without financial worries. This is something everyone should aspire to.
3. Have a three to six month emergency fund
Finally, the last goal that everyone should try to achieve is to have a emergency fund with three to six months of emergency expenses.
Emergencies can happen to anyone. In fact, Pew Trusts found that about 60% of households had experienced a financial shock in the previous year. Having an emergency fund can turn these financial shocks from a crisis into a mere annoyance as you have the money to pay for them.
To make sure you have enough emergency savings, open a high yield savings account and set up automatic transfers every month of the amount you can afford. You can also save windfalls like tax refunds or cash birthday gifts until you’ve saved three to six months of expenses.
RELATED: Emergency fund calculator
By achieving these three milestones, you will be on your way to a financially secure future. Start working towards them today!
Alert: The highest cashback card we’ve seen now has a 0% introductory APR until almost 2025
If you use the wrong credit or debit card, it could cost you a lot of money. Our experts love it this best choicewhich features a 0% intro APR for 15 months, an insane repayment rate of up to 5%, and all somehow without any annual fees.
In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.
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