What are financial goals examples?
What are the three types of financial goals that will benefit you?
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The New Year is upon us and you’re ready to set financial goals. All you know for sure is that you want to save more, pay off credit card debt or student loans and maybe get rich. Maybe you even set a new year’s resolution to do just that.
Or at least finally afford those big purchases and major investments you’ve always wanted, mainly new car, fancy vacation, home your own, college degree or retirement.
Your very first step towards financial freedom and independence in 2020 is to set the right financial goals for you that balance your long, medium and short term financial needs.
What are financial goals examples?
Financial goals examples are well thought out and well-researched plans for spending and saving that will give you peace, calm and great finances for the entire year.
The best examples of financial goals not only help you manage your finances better but also educate you on financial literacy and education.
Here are 20 smart financial goals examples to focus on throughout the year.
Short Term Financial Goals Examples
First, let’s discuss several short-term financial goals. Short term goals are easier to achieve in a small amount of time.
Plus, by offering you a quick win, short term financial goals also boost your confidence in your abilities to not only save or cut spending but to make smart financial decisions for yourself.
It is essential for you to stay committed and consistent, building healthy financial habits that set you up for lifelong prosperity. That all starts by setting and achieving your short-term financial goals.
#1. Create a Guerrilla Budget
It starts with a guerrilla budget. Judging from the way that most people spend money, I can see that you’re likely not familiar with budgeting, much less a guerrilla budget.
A guerrilla budget, as defined by me is “your budget on steroids”. You become the master of your money, not advertising, not spoiled kids, not friends who have financial emergencies, not things you don’t need.
It’s the process of you, tracking your spending and getting rid of everything that is not necessary.
Sure, after you get your debt and bills under control you can budget in a few items you enjoy, but first, you will start with paying your necessary bills with ease, getting your debts low, and creating a system to have emergency money for your emergencies only.
Learn to say the word no. If you can’t afford it and/or don’t need it, it should not be a part of your spending process.
#2. Use a Budget Planner
You know how much money you take home; you know where you are spending on things you can’t afford, so this is where you start.
A budget planner can be anything from a simple notebook to a sophisticated budget planner or online budget spreadsheet. I recommend secure online spreadsheets because you can work from anywhere and update your goals easily.
Create a budget for immediate everyday items such as groceries and short-term items such as school supplies or new clothes for work, long term items include a car or saving tuition to go back to school.
Creating a budget and keeping it is one of the best short-term financial goal examples.
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#3. Track Everything You Spend
Sometimes you spend money that we are not aware of because we don’t pay attention to what we are spending on. You need to create a budget for everything you spend money on.
Maybe you can’t afford a necessary item this month, but if you pay off another item, or save enough money for a new item you need, you can get it in three months. Whatever you do, don’t keep charging for things you don’t have money or income for.
As a rule, nothing should be charged unless you can pay it off in three months, minimum, unless it is a dire emergency, say, for example, your health.
So, if one of the financial goals examples you’ve set for yourself is to cut spending, tracking your spending is critical.
#4. Plan for Your Financial Needs
Write a plan for daily needs, weekly needs, monthly and for the year. What do you need to spend money on? You need to know.
Do you plan to return to school in three years? You need a plan for that. The plan should include an affordable public school where student loans are kept to a minimum and education is an absolute must for your field.
Many people gain access to good-paying jobs by working their way up in a company getting experience as they go. Many jobs will pay for you to take courses to gain knowledge and some will pay for a college degree. In this case, spending money on education might not be actually necessary to earn an income.
Are you planning to purchase a home or a condo? You need a plan for not just your down payment, but mortgage payments and household expenses.
Just remember when we’re talking about needs, these are essential purchases and investments for current and near-future must-haves. We’re talking about food, housing, health, transportation, and career.
#5. Determine the Cost of Your Wants
Do you really know what you want? What are your dreams and goals for the future? What investments do you need to make in order to achieve them? Don’t just take a stab in the dark, know what you want based on experience, knowledge, and research.
For example, many folks get useless educations or degrees because they did not research the field and understand “exactly” what is involved. Occupations change over time, what was in demand 20 years ago, may have no demand now.
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But some people are still getting into fields with student loans and years of study, only to find out they made a huge mistake and there is no demand in that field. Research how to find good employment in your field.
In other cases, if you want to quit your job and start your own business. You need to know not only what investments your new business venture requires, from essential tech for startups to online business tools, but also how much money you need to actually quit.
A valid question needs to be whether or not you can afford to quit your day job. If you are planning to make this transition, you need a plan for your finances.
#6. Stop Spending on Nonessentials
Make a list of the things you have or are doing that cost money. Then make a second list of the things you can do without. It’s easiest to do this with your credit card bills and bank statements on hand, go through each charge one by one.
Trust me, there are expenses you are forgetting about or things you don’t even remember signing up for, like online subscriptions or monthly payments that start to add up.
Expenses to consider cutting include Cable TV, daily lunches or coffee, eating out, going out, drinking, clothing or even going back to school.
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For each item, as yourself the following questions:
- What is necessary right now?
- What can I do to make my life more affordable?
- Do I need this and am I actually using it?
- What can I eliminate to help get out of debt?
These are the questions you need to put at the top of your list. Student loans can be particularly worrisome, make sure you really need them, and they are kept to a minimum.
Long Term Financial Goals Examples
With short-term financial goals examples set up, let’s talk about medium-term and long-term financial goals. These are the goals that will sustain your commitment to financial responsibility and living a frugal life. The keys to achieving your money goals and unlocking a life of financial freedom you’ve always dreamed of.
A long-term goal is one that is set for an extended period of time, for financial goals, let’s say more than three months. Unlike short-term goals, these goals require commitment and consistency over longer periods of time, as well as financial foresight and decision making that prioritizes future prosperity.
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One action won’t solidify your long-term financial goal achievement, but rather daily and weekly money habits exercised over a period of months, years and if you’re smart decades. With these types of goals examples, we’re entering the territory of long-term financial planning.
Here’s the thing you must know – long-term financial goals are for everyone! Whether you’re a student, recent graduate, employee, entrepreneur, stay at home parent, or even retiree, you have to think long-term with your finances. They enable you to see the most financial growth and secure your lifelong financial security.
So, don’t just think about how you can save money when you’re broke or how to make a budget (short-term financial goal example)s, but how you can save enough for retirement or how you can pay off your mortgage (long-term financial goal example)s. Do you see the difference?
With long-term financial goals, you are looking beyond your immediate and critical needs and making money choices that secure your future financial wellbeing. That’s how you build wealth, compound your savings and live a good life.
#7. Learn Sane Saving Techniques
If you will ever have enough money, you must learn sane savings techniques, these techniques have been created by me for you. Your long-term financial goals should start with savings all over the place. It sounds crazy, but it is possible, no matter what your income level is.
I recommend concentrating on several savings accounts. You will start with one and end up with at least 3-5. I will discuss the specifics of these savings account below.
Your ability to save will be a major key to your financial goals. There are many ways to achieve these financial goals examples.
Instead of always thinking about spending, you need to train your mind to think about saving! And prioritize it. Let’s talk about how you can achieve this example of a financial goal.
#8. Start Saving a Dollar and Coin Jar
Get two simple jars, at least a foot high. Every week empty a handful of coins in your coin jar and place at least a few dollars in your dollar jar, between $2 and $10 dollars. This money will accumulate until the jars are full.
When it gets full, take out the coins, redeem them at the store where there is a coin exchange, take the money from the coins and take half the dollars to the bank. This will be placed in your passbook savings accounts. This will be a secure account and will be the start of a first serious savings account.
#9. Build up an Emergency Fund
Yes, I said a passbook savings account. This is your first great savings account. Now, I know what you’re thinking. You are thinking, “I am not getting much in the way of interest.
The interest is not an important issue at this point. The issue is the accumulation of funds for short-term emergencies and long-term financial goals. This is where you start to accumulate.
Your short-term financial goals will be born in your passbook savings account. Everything sprouts from here. Try to put at least $50 to $200 a month in your passbook savings account. For higher-income folks, it should be in the range of $200 to $600.
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And no, buying a new iPhone, subscribing to Disney Plus or buying a new pair of shoes are NOT emergencies, but breaking a tooth, needing medication or having to fix your laptop that you use for your business is. Be sure your emergencies are legitimate. The best way to know is if they impact your health, home, and ability to earn an income.
Congrats, you’ve started saving an emergency fund! This is one of the best long-term financial goal examples that protects you from going into debt or having to use credit to pay for emergencies.
#10. Open a Higher Interest Account or Mutual Fund
An overage is the amount of money in your savings account exceeding your needs. For example, say you have $2,000 in your saving account, but your emergency fund and debt repayment only requires $1500. You would take the difference (in this case $500) and invest it in a higher interest account.
As you accumulate money in your passbook savings account, it will be used to pay off bills, purchase short term more expensive emergencies or add to a higher interest savings account.
There are higher interest savings accounts that include simple, low cost, low-risk mutual funds. According to NerdWallet, “A mutual fund pools cash to buy stocks, bonds or other assets, giving investors a cheap way to diversify and reap market gains while hedging against losses.”
The mutual funds can be used as a general savings account for long term savings or an individual retirement account. With this mutual fund account, you are able to achieve impressive returns on your investment without the risk.
Use your overage in your basic account every six months to fund a higher interest account.
Or if you can afford it, set up an automatic withdrawal from your passbook savings account into your high-interest savings account (TFSA for Canadians) or into your mutual fund. Setting it and forgetting it is the easiest way to save long-term.
#11. Start Paying Off Smaller Debt
Do you have credit card debt or outstanding bills that need to be paid off?
Write down your immediate short-term financial goals as they relate to your needs. An example would be to pay off a $400 credit card balance when you accumulate $500 in your passbook savings account.
You need to prioritize paying off your debts, as you balance saving and investing. Especially taking in mind interest rates on your debt.
A common question when setting financial goals is whether you should save, pay off debt or invest first. The answer will differ from person to person, but it comes down to balancing the financial weight of each decision.
Examples of Debt Repayment vs Savings
Let me explain. For example, if you owe $500 in credit card debt, and the annual interest rate is 19% vs saving $500 in a savings account with only 3%, the weight of the debt is greater. The longer it takes you to pay it back, the more you owe.
In another example, say you owe $2,500 on your car payments and you’re considering paying it off sooner. But car payments are fixed, the interest is within the payments and paying it off faster doesn’t save you any actual dollar amount. The financial weight of saving is likely greater.
Lastly, it also depends on whether you have an emergency fund saved. It’s important to have money set aside to pay for unexpended expenses, so you do not fall farther into debt.
You know the various needs you have, but you should have both a short-term goal and a long-term goal of paying off or paying down your debt. Debt is like a weight, both emotionally and financially. Debt also snowballs if it is not kept under control.
#12. Pay For Daily Expenses with Cash Only
This is especially important if you have existing credit card debt or you’re prone to spending unnecessarily. Tapping and swiping make it way too easy to spend money.
Luckily you’ve already started saving cash and coins (see financial goals example #8 above).
Use this dollar and coin jar for any super short-term financial expenses you have as well as to fund your savings account and immediate wants. Don’t just use this money-saving strategy when you’re broke and in debt, but keep it up long-term.
Here are some examples of cash only expenses:
- Paying for groceries
- Getting gas for your car
- Going out to eat
- Paying for postage
- The kid’s lunch money
- Going to the laundry mat
- Paying the gardener
This will also prevent charging on your credit card or using your debit card (another great financial goals example!).
#13. Educate Yourself About Financial Literacy
With the internet and Youtube, you have absolutely no excuse to not know how money works. I’m sorry but, not learning about personal finance in school just doesn’t cut it either.
Learning financial literacy is YOUR responsibility. Why? Simply because it’s your financial future on the line, no one else’s. And if you’re a parent or spouse, it’s your family’s future too.
You have to understand the basics of spending, savings, debt, investments, and liabilities.
If you don’t understand the financial impact of buying big-ticket items or investments like cars, homes, and education you can ruin your finances for a long time. Just because it’s on credit, or covered by a loan or mortgage doesn’t mean everything will be okay. In many cases, people have been ruined by student loan debt, or even making late payments can destroy your credit score.
Think, research, ask for financial advice before making any large purchase, your future self will thank you.
In the meantime, educate yourself by taking online courses, watching videos by reputable financial channels like The Dave Ramsey Show or The Financial Diet.
#14. Pay Off a Car or Credit Card
Are you making monthly car payments or credit card payments? Do you have high-interest debts?
Wouldn’t it be amazing to no longer have to pay that monthly amount towards a purchase you made years ago? You can, if you prioritize paying off your car or credit card.
Here’s why it’s so important to hurry up and finish paying off these types of debt.
I talked to a young girl just a few months ago who wanted to get her finances in order. I told her you must first start with critical thinking, not allowing advertisers to tell you how to purchase. They recommend high-profit items that benefit their pocket, not yours.
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I told her the example of refinancing a car. She said, “STOP, I already made that mistake.” A while back, she saw an ad to refinance her car for a lower interest rate, she did and then her sister pointed out to her, “do you realize that you just added two years to your car note?” She told her, after looking at her paperwork that the two years she had left on her car loan was now four years with her new loan, adding an additional two years.
Don’t make this mistake with your own debts. Refinancing can be dangerous and often end up extending your prison sentence. That’s the same for your mortgage payments if you have one.
#15. Allocate Any “Free Money” to Savings
With your pesky car payment, outstanding bills and credit cards cleared you’ve freed up a portion of your monthly expenses. Now, don’t make the financial mistake of spending this money by buying something you don’t actually need.
No! Use this space in your monthly budget created by paying off your debt to save money. Remember your passbook savings account and the high-interest savings account or mutual fund you started (refer to financial goals example #9 and #10).
When you pay off a bill use at least half of that money to place in passbook savings. The other half will be used to put towards paying off other bills.
Save Any Extra Money You Recieve
For example, you’ve paid off your car payments and no longer need to allocate $250 per month towards this.
- Take $125 and allocate it towards your passbook savings account. Better yet set up that automatic withdrawal since you’re already used to this month being spoken for.
- And take the remaining $125 and put it towards your next bill or greater debt like your student loans or mortgage.
Some folks don’t see the benefit of paying off a bill, but you’re smarter than that. Be conscious of every penny you save from paying off a bill and reallocate that money to something else useful like paying off another bill or place it a savings account.
Don’t stop there, any time you receive unexpected money from gifts or tax returns allocate it towards savings and debt repayment. Don’t just spend it wastefully.
#16. Purchasing or Leasing a Car
Do you need to purchase a car this year? Is it more affordable and more convenient to drive rather than take public transit?
If you haven’t heard, buying a car is the worst investment, and not really an investment at all, but in reality a liability.
New cars are expensive especially when you add the first-year warranty service and the cost of general maintenance and vehicle registration. When purchasing a car with savings in mind you must know the many options you have.
So, look hard for a safe affordable new car or consider a CPO also called a certified pre-owned car. CPO’s are cars that you purchase on the used side of a new car lot, they are less than 5 years old, have about a 150-point maintenance check and you get a warranty (often the same length of new cards).
You also have other options for quality used cars such as previous rental cars, cars that were used as leases, or a private owner with a well-kept car. Not to mention you can also lease a car instead of buying. Learn more options about car-buying options here.
#17. Buying an Affordable Home or Condo
Finding affordable housing is a major concern for everyone, especially in large major cities like New York City and Toronto. The problem is as you know that high-paying jobs are usually inexpensive city-centers.
Plus, with the rising cost of rent and the declining availability of rental units, more and more people are looking to transition to owning their own home.
Here’s the good news! Buying a home is still possible in some U.S. states if you are middle income. You just have to do your research!
Homes are getting extremely expensive in the larger more populous states such as California, New York, New Jersey, Washington D.C. as well as others. But there are many states especially in the south and mid-west where you can buy affordable homes if you are middle income.
But I caution you to do your research and ask the right questions before buying like:
- What are the monthly mortgage payments?
- How much is the downpayment?
- Is this home affordable and within my budget?
- What’s the tax rate for this community?
- Are there any unexpected expenses I need to budget for?
- Is this home built for longevity?
- How much are lawyers, broker and/or real estate fees?
- What renovations and repairs are required?
- What’s the average monthly and yearly upkeep?
- How much will monthly bills be? (Electricity, water and so on)
To list just a few!
You can lose a lot of money if you don’t understand all the steps and costs of buying a home new or used. You are not guaranteed a good home if you buy a new home, so it is equally important to know the new home buying process also.
#18. Save for Retirement
The first thing you must understand is that there are hidden ways to save for retirement. What I am referring to are things that can rob your retirement savings when they are not done right.
Say for instance, if you don’t buy a home or car the right way — a bad one can cost you your potential retirement savings in constant repairs and maintenance on a bad product. So, to begin with, purchase big things right by analyzing your purchase closely so you will have money to fund your 401k at work.
Try to understand that a 401k goes a long way because it is money you don’t pay taxes on. Then when you budget, keep all your income in perspective you will understand the potential in your retirement savings and the many ways you can save.
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If you work for about 11 years in the United States, you will qualify for Social Security and Medicare Retirement HealthCare. For most retirees, it will not be enough to live off, so it is necessary to save money in a 401k, Individual Retirement Plan –IRA.
- If you have a government job you can qualify for a pension if you stay there for the required amount of time, to supplement that you can pay into a thrift plan. As little as $50 a month in an Individual Retirement Plan or Thrift Plan will make a big difference in 20 to 30 years.
- If you are self-employed you will be required to pay into the Social Security system, and you can also get one of the self-employment plans, such as an IRA, Simple-IRA or SEP-IRA to supplement your social security.
#19. Increase Your Income
Your current job can be a major source of increased income. Let me explain the many ways. Find out the path to promotions on your job and how you can get on that track. Then, find out if your job does tuition reimbursement for college, masters and some even for Ph.D. degrees.
If your job does not appear to have a path to promotion for you or tuition reimbursement, start writing down your best assets and how you can improve while on your job – mentors, classes, experiences you can use to improve. Then, start doing extensive research about employers that offer a path to promotion and/or tuition reimbursement. After that, start applying. You will be surprised at the opportunities that will open to you when you reach out with all those assets you have to offer.
Find companies that not only have the best work opportunities, but also the best retirement benefits, health care benefits, educational benefits, and vacation pay. Verify that the company and department are stable and growing. The last thing you want is to work in a toxic workplace.
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Make More Money with a Side Hustle
An alternative avenue to making more money in the new year is to start a side-hustle or part-time work at home job. There are so many ways to find work at home job and legit part-time gigs.
Do your research, make sure the company is legit and use your free time in the evenings and weekends to start a profitable business. Maybe one day you can even go from side-hustle to full-time self-employed.
#20. Repay Student Loans
This is complicated in the United States and getting more complicated as I write. The student loan propaganda is outrageous. The money that is being made off the backs of students and their parents is sometimes going to lenders bank accounts for life, for various reasons. This should not be.
Many students are getting “caught up” in the student loan propaganda that tells them, “no matter what degree, don’t look at the loans, sign documents blindly, and you will get a good job”. This is not true, paying back student loans are horribly difficult.
Sometimes students get a good job, but even with a good job much of the income goes to pay student loans – so, what was the point? Many students can’t make enough money to make payments. Then, there is the IBRP or Income-Based Repayment Plans, but with those, you are delaying full payment for about 3 years, meanwhile, your balance swells. I have been told that during that period some balances have gone from $35,000 to $75,000. So, now you owe a balance of double what you borrowed because you couldn’t afford the payment.
How to Pay Off Your Student Loans
To pay off your student loans if you already have heavy student loan debt:
- Live very frugal and budget like a champ. Always pay your principal and interest, and then an additional payment to the principal for early payoff. Do everything in your power to never miss a payment.
- Get a second job, even if that sounds like dread. If you don’t make enough to cover your payments with your first job, put all the second job on your monthly payment.
- Pay as much as possible back. If you inherit money, any unexpected money or tax returns put as much as possible on your student loan.
- If your home swells in value, sell it and pay off the loan. A student loan can swell from $50,000 to $500,000 in 20 years if both the principal and interest are not paid monthly. I know actual cases of this happening to people who had a check garnished and they only garnished the interest, not the principle. That sounds like a low-down dirty trick by the government and it is, that is why the principle swelled so big.
And yes, that means no big purchases or vacations until you’re free of debt. It’s possible!
Get Your Simple Budget Spreadsheet
Are you ready to get started with your new year’s financial goals examples? Awesome, step one is to create a budget and it’s easy with the Simple Budget Spreadsheet, compatible with Google Docs and Microsoft Excel.
Get started today. Even the little steps like using cash only, or cutting back on a bill or two will make a difference.
You can live a life free of debt, with lots of savings, but only if you’re brave enough to get started.
May your new year be prosperous and bring you closer to financial freedom.
What’s your financial goals example?
More About Guest Contributor
Lois Center-Shabazz shares her expertise and success in real estate and mutual fund investing by first teaching the importance of learning to save, budget and understand how to buy big things the right way. The big things such as cars, homes, and education.
She is the editor of the personal finance website – MsFinancialSavvy.com, and has a mega eight-week eCourse on Fantastic Finances. She also has created two shorter eCourses, one for Car Buying and one for Home Buying.