Everyone’s financial history and future is unique to them.
Your income, expenses, and future goals won’t align exactly with anyone else. However, there are a few aspects of financial goals that most people share.
Smart financial planning implies similar rules for most people. There are a few things that simply make sense no matter who you are.
To start, there are 10 smart personal financial goals that everyone should plan for:
- Eliminating debt
- Retiring comfortably
- Ending financially draining addictions
- Becoming financially literate
- Living within realistic means
- Having an emergency fund
- Investing in your own future
- Being completely financially organized
- Protecting your family’s future
- Increasing income before retirement
Many of these goals are interconnected with each other. In fact, there are common threads between any combination of the above.
That’s why financial planning is so important; your personal finances are an ecosystem reliant on your knowledge and sound decision-making.
What Should Be My Financial Goals?
All of the goals we listed should in some way fit into your financial plan.
Forgoing any one of them will cause some level of chaos or discomfort for yourself and/or for anyone who relies on you.
Let’s go over each goal briefly to explain why it’s important so you can set your financial goals accordingly.
Eliminating debt
Eliminating all debt is the goal here.
The reason is simple: debt accrues interest which creates an increasingly large drain on your life. Until your debt is eliminated, all other financial goals will be significantly harder to achieve.
Retiring comfortably
Saving for retirement is crucial to avoid discomfort and/or reliance on loved ones for support.
To retire comfortably, you must calculate your expenses relative to the retirement income you will receive. Getting to retire comfortably may require any mix of the following changes:
- Eliminating debt so you don’t pay any after retiring
- Becoming comfortable with a set income
- Having leftover savings for unexpected expenses in retirement
- Sitting on some level of stability (a house you own, a sustainable budget, etc.)
Ending Financially Draining Addictions
This isn’t a long-term financial goal in itself, but it is a necessary financial step to achieve your other goals.
Unless you are wealthy enough to indulge in frivolous spending continuously, it’s a much-needed goal to reach.
Addictions to anything too costly function as parasites eating the money in your bank accounts. It’s better to follow models like the 50/30/20 rule to make sure more money is being saved or at least spent on necessities.
Common habits and addictions that bog down personal finances include:
- Hoarding (also requires more space to sustain)
- Over-shopping for expensive products (brand-name items are great, but only when they don’t cut into more important expenses)
- Unnecessary and over-eating (a healthy but filling diet can be possible when you build habits around it)
- Substance addictions such as smoking (negative health impacts can incur even more future expenses)
Becoming Financially Literate
Financial literacy is an extremely underrated skillset and personal goal.
Understanding the basics of day-to-day finances are important. But it’s worth it to go at least one step further and explore things like:
- Investment strategies for growing your wealth
- Fighting the effects of inflation
- Well-timed buying and selling of property
Financial literacy simply has a strong causal relationship with household wealth accumulation.
Living Within Realistic Means
Learning how to live within a way that is appropriate for your budget and income is a skill.
It can be a hard thing to start doing, but it is necessary if you want to plan a better financial future. The main purpose of this step is to make saving and investing more plausible.
Having An Emergency Fund
Similar to living within your means, having an emergency fund is important to leave your financial plan (relatively) undisturbed.
Everyone goes through emergencies during their lifetimes. Because an emergency will happen eventually, having a generous emergency fund is necessary to avoid subsequent financial emergencies.
Investing In Your Own Future
You work hard for your money, so why not make your money work for you?
Investing is important for every aspect of your financial future.
Being Completely Financially Organized
Being organized is critical to optimizing your financial life.
This point needs less explaining, as long as you remember to systematize your financial management so that you don’t forget important goals and the steps that lead to you reaching them.
Protecting Your Family’s Future
For most people, this means estate planning and perhaps creating an inheritance fund.
What is right for others may not be right for you; everyone has a different family situation and thus different estate planning needs.
Increasing Income Before Retirement
When you can, it’s important to increase your income.
Making money with a side-hustle is increasingly easy with the help of various online platforms and apps.
10 Profitable Side Hustle Ideas to Find Financial Bliss
What Are The Most Common Financial Goals?
According to a 2021 survey by LendEDU, the most common financial goals for Americans are:
- Buying their own house or apartment
- Having enough savings to retire
- Paying off credit card debt
- Building an emergency fund
Short-Term Financial Goals Examples
Short-term financial goals don’t normally sit at the top of peoples’ minds (as the above survey confirms).
However, there are short-term goals that most Americans can at least relate to. The most common made the list, and that is removing credit card debt.
Shedding off credit card debt is the most common financial goal that doesn’t normally take years (or even decades) to achieve. That’s because credit card debt is the most short-term, even if you’re struggling with it.
But it’s a particularly expensive kind of debt to lose control of, and losing control of it will tank your credit score.
Other common short-term financial goals tend to surround saving for short-term expenses. For example, saving for a car or getting a part-time job to support student life.
Long-Term Financial Goals Examples
For most people, the most pressing long-term goal, and the top financial goal overall, is owning a property.
This is followed closely by retirement savings.
It is no surprise that the financial goals that more Americans put at the top of their priorities list are long-term. Long-term financial goals are almost invariably:
- Much more expensive than any short-term goal
- Much harder to adequately plan for and succeed in
This is why our top 10 list includes so many building blocks of long-term financial success. But by aiming to tackle all of those goals, you can make the biggest financial challenges in life much more easily attainable.
Conclusions
No two peoples’ finances are exactly the same.
But sound financial logic is the same regardless of who you are. These are a few smart financial goals that everyone should at least attempt to reach.
Photo by Mourizal Zativa on Unsplash