How to Set Financial Goals for Your Future - Baltimore Post-ExaminerBaltimore Post-Examiner

How to Set Financial Goals for Your Future

Image by Nattanan Kanchanaprat from Pixabay

There are stages to setting financial goals. It’s not necessary to stress about what happens in 50 years if you’re not addressing your immediate needs. Keep that in mind and this will be a much simpler process. Let’s begin in the here and now. What are your goals for short-term financial security? Once you set those, we can talk about the next level.

Step #1: Setting Short-Term Financial Goals

The two short-term goals that immediately come to mind are creating a budget and getting out of debt. These work hand in hand. Make a list of all your expenses, calculate how much income you have coming in, and focus on paying off what you owe. One method for doing this is called the debt avalanche method, where you pay off the highest interest accounts first.

When it comes to budgeting, don’t leave anything out. Even those “minor” expenses like your $14.99/month Netflix bill count as expenses. If you leave it off the list, you’ll end up miscalculating what you have left every month. Another good tip here is to look closely at recreational expenses and take-out bills. Those are both areas where you can cut back.

During this stage, create an emergency fund for unexpected expenses. You can start small, putting aside just a few hundred dollars. As time goes by, you can build that fund and collect interest on it if you keep it in an interest-bearing savings account or money market checking account. Neither will make you rich, but at least your money will be working for you.

Step #2: Mid-term Financial Goals

This list is short and simple. Pay off your student loan debt and set up some life and medical insurance. The former should be addressed as early as possible. Student loan debt can be a heavy load to carry. Make double payments when you can, refinance for a lower interest rate if it’s available, and get it out of the way so you can enjoy life after 35.

As for insurance, you don’t need Universal Life or annuities. Those are nice to have, but they can be expensive. A simple goal would be to set up a term life insurance policy that will cover your family’s expenses if anything should happen to you. Obviously, this need will grow if you choose to start a family, but that’s a topic for another day.

Step #3: Long-Term Financial Goals

Young people fresh out of school don’t look at retirement savings as a pressing matter, but they should. Contributing the maximum amount allowed into a 401(k) or pension fund could facilitate an early retirement and a comfortable life in your golden years if you start early enough. Don’t put this off. It’s a long-term goal that you should address right away.

To assist with retirement planning, seek out a good financial advisor or financial planner who has experience in this area. Some folks feel they can do it themselves by playing the market on Robinhood or opening a Roth IRA with Acorns. Those tools are great, but they are not as good as professional financial management. Find an advisor and you’ll retire in style


About the author

Kevin is a former fintech coach and financial services professional. When not on the golf course, he can be found traveling with his wife or spending time with their eight wonderful grandchildren and two cats. Contact the author.
COMMENT POLICY

Leave a Comment

Comment Policy

HOME / ABOUT / CONTACT / JOIN THE TEAM / TERMS OF SERVICE / PRIVACY POLICY / COMMENT POLICY