When you look back at the last ten years, do you feel you have made financial progress? Or could your situation be better? Many of us go through life wishing it could be better. However, we lack a plan to move in the right direction. This list of 15 great financial goals in life will give you some ideas, and our free financial goal planning workbook a tangible way to track your progress.
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15 Great Financial Goals In Life
1.- Budget Your Money On Purpose Every Month
If there is only one goal that you set yourself to accomplish in the next month, let it be getting on a budget. A lot of people resist doing a budget because they feel restricted. But actually, living on a budget can be very liberating.
Your budget will show you exactly how much money you are bringing in and how much you are spending. When we make financial decisions based on factual information, we are setting ourselves up to win.
A budget doesn’t need to be complicated. I recommend that you do it on paper. Yes, it would be more time consuming than using an app or spreadsheet, but there are considerable advantages to that. Writing things down creates awareness, which is a critical trait to win with money.
2.- Live Below Your Means
Most people live beyond their means, meaning that they spend more money than they make every month. According to a wealth survey by Charles Schwab, 59% of adults in America are living paycheck to paycheck. What’s even more worrisome is that many people blame FOMO, or the fear of missing out, for their over-spending habit.
Committing to live below your means is not easy. On the media and social media, we are encouraged to spend. Many people spend on stuff they can’t afford because they feel like they have to portray a particular image of status, instead of just being themselves online.
We are being brainwashed continuously to finance, use credit cards, and buy now, instead of making planned purchases in cash. If you want to have a great financial future, you must resist the temptation to overextend your expenses. Make sacrifices today and reduce social media consumption if it is necessary.
The key to living below your means is to be content with the things you already have, or buying only those you can afford to pay cash for. When you start financing stuff, you give away your potential for growing wealth.
3.- Build Up A 6-9 Months Emergency Fund
Living paycheck to paycheck is a cycle you want to escape and avoid at all costs because it will lead to a downward spiral. When you don’t have any money left at the end of the month, you can’t save for emergencies. And, if you have no cash for emergencies, you will default to get into more debt.
According to a financial planning survey by First National Bank of Omaha, 53% of U.S. adults don’t have an emergency fund. Like it or not, an emergency will hit your life, it is just a matter of when. And, without a little cushion to fall back on, you will likely rely on credit cards.
This is a dangerous place to be in. Living paycheck to paycheck, having no money in savings and getting deeper in debt. If you are trapped in this cycle, you will be set back from achieving your financial goals in life.
But there is good news. Start budgeting on purpose and make sacrifices to live below your means, and you will start growing your savings quickly. This is the time to get rid of car payments, credit cards, and any other debt.
Your first goal in terms of saving for emergencies is to set aside a baby emergency fund of $1,000. The ultimate goal is to have a healthy emergency fund of 6-9 months of expenses. This money will be your support in case you lose your job, become ill, or face other hardships in life.
4.- Get On The Same Page With Your Spouse
Getting on the same page, financially speaking, with your spouse can be one of the most significant challenges in every marriage. But to be honest, only if you establish money goals together, you will see results.
If you and your spouse can’t talk about money without sparking a dangerous fireworks show, you may need marriage counseling. Money fights are often the symptom of other problems in the relationship.
However, if you guys disagree on certain things but agree that you need a better plan, you are in much better shape. Start by dreaming up together the lifestyle you wish you could have in ten years instead of diving straight into your money problems.
For instance, do you want to be 100% debt-free, have a boat, or travel the world every summer? When you dream together, it is much easier to want to plan together as well. So, establish a set of generic rules that will get you closer to that ideal future.
Establishing goals like getting out of debt ASAP, saving to pay cash for trips, and getting on a budget will propel you forward. Keep in mind that the process of going from money disagreements to making financial decisions together can take time. Patience will be your best ally.
5.- Stop Using Credit Cards
I know that you have heard all about the advantages of using credit cards. That they help you improve your credit score. That you can use the “free miles and points” to travel around the world. And, that you can earn cashback on your purchases, so it is like getting paid to pay with plastic.
Most people think that way because credit card companies do an outstanding job marketing their products. But we have bought into this illusion of financial increase, unaware of the collateral damage.
The reality is that credit card use has a direct impact on your financial wellness. Studies have documented how consumers spend a lot more when paying with credit cards than cash. In some instances, as much more as 100%! Not only that, but most people who use credit cards also don’t pay off their balances in full at the end of every billing period.
Carrying a credit card balance month to month results in costly interest fees, which burdens people for years. Ultimately, you will be better off eliminating credit card use. The convenience of paying with credit cards, or the incentive to earn a few perks, in the long run, can end up costing you a lot of money.
6.- Take At Least One Nice Vacation Per Year
Who does not like to go on vacation? Whether you love the beach, the mountains, or sightseeing through Europe, I think we all deserve at least one nice vacation per year.
Having said that, we need to be responsible to make this financial and personal goal a reality. This is a great goal to plan for when you are out of consumer debt and can afford to put money aside every month for the big vacation.
A family of four can expect to spend between $6,000 to $8,000 on a nice vacation. This budget would be enough to spend at least a week in an all-inclusive beach resort in Mexico or the Caribbean. $8,000 is also a very reasonable budget to take the family on that dream vacation to Orlando to enjoy Walt Disney World and Universal Studios theme parks.
Adjust your savings goal according to your family size. If you are looking at a couple’s trip, $4,000 will do. And if you are single, depending on where you want to go, $2,000 would be an excellent start for a nice trip.
Divide your vacation savings goal between 12 to find out how much money you need to put aside per month. After a year of savings, you can afford to take that dream vacation with financial confidence. And, don’t forget to include vacation savings as a recurring item in your budget.
7.- Invest 15% Of Your Income For Retirement ASAP
When you get out of consumer debt, it is crucial to start investing 15% of your income for retirement. I would not rely on social security benefits as my only form of income in my golden years. If you really want to enjoy retirement, plan on government benefits to be the cherry on top of the cake.
As you can imagine, putting 15% of your income into retirement investments can add up to some serious cash over time. But it requires discipline and sacrifice today to see the results tomorrow.
For example, say that you are 30 years of age, you bring home $4,000 after takes and decide to put away 15% of your income, that’s $600. What would you have to give up today to be able to invest that amount?
The average car payment is over $500 per month. But if you set your priorities right, you can choose to drive a paid-for inexpensive car for the opportunity to turn those $500 into wealth.
If you were to retire at 67, a $600 monthly investment, assuming an average annual gain of 8%, could turn into more than $1.3 million. If you got a late start at 40 years of age, you are looking at having almost $500,000 in investments. And if you waited until your 50th birthday to start investing from scratch, those same $600 could turn only into $134,000 by age 67.
As you can see, it is never too late to start, but the sooner, the better. I would much rather have to worry about what to do with a million dollars, than with a modest social security benefits check.
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8.- Diversify Your Streams Of Income
Most of us rely upon our salary as our only form of income. While this is normal, I believe we would all be better off if we diversify our streams of income. Think about side gigs you can do to generate extra cash or even passive income.
You can turn that hobby for playing the piano into extra cash by offering lessons. If you have expertise in a topic, you could help other people or companies working as a coach or consultant. What bout starting an online business? There are countless stories of people who have actually replaced their full-time income, and then some, starting an online business.
Non-retirement investments are also an option if you have extra money to invest. And, for some people, real estate can be the right choice. Be open to the possibilities! When you diversify your streams of income, your chances of achieving your financial goals in life would be better.
9.- Pay Cash For Your First Car
I bought my very first car with cash. Back in 1999, when I was a college student, I paid $3,200 for a blue Dodge Neon. That was all the money I had to my name. I had been saving for at a long time and working at the college cafeteria, making about $5.15 per hour.
But years later, things changed. I fell for the bad advice that I needed a car payment to build up my credit. Not only that. I financed it for five years. Every month payments of $297 were drafted from my checking account.
When I was done, I swore I would never do it again. In fact, I kept driving that car for a total of 11 years. Instead of making payments to the bank, I made the payments to my own savings account.
It’s incredible how much money you can set aside when you don’t have a car payment. I am not an advocate for driving beat-up cars forever, but I do want to encourage you to swim against the current. I ended up saving enough cash to replace my old car in cash.
I bought a six-month-old car with 38 miles on it. It still smelled like brand new and definitely drove like one too. We were able to negotiate the price down because we never told the salesman we were planning to pay cash for it. He assumed that just as most people do, we were financing it.
When we finally settled on the price and had a written offer, I pulled my checkbook and wrote a check. The guy was shocked and probably got an earful from his finance manager. But I was beyond happy to write a hefty check like that, knowing that I had achieved one of the most important goals in my life, to pay cash for my “new” car.
And guess what, a couple of years later, we did the same to buy my husband’s truck. He had also been driving the same car for over 11 years. That’s one thing I will never regret, paying cash for our gently-used new vehicles.
10.- Never Finance A Vehicle
When you reach the goal of paying cash for a car, please don’t ever go back! For some reason, some people do this right the first time, and then they fall for a 0% financing when it’s time to upgrade.
Just keep saving money every month, and over time, you’ll be able to upgrade for cash as well. Sell the current car and add that to your vehicle savings to pay in full for the upgrade. Also, you will get the best return on your money if you plan on keeping your cars for at least ten years.
Remember, cars lose value every time you get them on the road. The last thing you need to advance your financial goals is to make payments on a vehicle that is losing value. Unless you are a millionaire with tons of money to burn, you cannot afford to take that loss.
11.- Pay Off Your House Early
What would you do if you didn’t have to make a mortgage payment every month? That’s the million-dollar question. You could invest a lot more on retirement, save up to buy rental properties, and drastically grow your net worth. However, most people never consider paying off their homes early.
We get content with the 30-year loan that makes the monthly payment so affordable that we lose sight of the opportunity cost of being in mortgage debt. Depending on your interest rate, you could end up paying twice or three times the value of the home, if you stick to the loan schedule.
To put things into perspective, do the math. Multiply your monthly payment by 360, if you have a 30-year loan, or by 180 if you have a 15-year mortgage. Your home will probably not be worth that amount even 30 years from now. You will always, in any situation, be better off in the long run if you get out of debt, any kind of debt, sooner.
But, what about the tax breaks, you may be wondering? That is another illusion that we have bought into. Did you know that you are more likely to be paying more in interest to the banks than what you are saving by taking the tax deduction?
For example, keeping your home mortgage for the sake of having a tax deduction is like saying, I will send $10,000 to the bank in interest payments to save $6,000 in taxes. Don’t let misinformation cost you a fortune! Make a plan to pay off your mortgage sooner.
And if you are just planning on buying a house, never get a loan for more than 15-years. Chose a fixed rate and make sure that your monthly mortgage payment and taxes don’t exceed 25% of your monthly income.
12.- Get Term Life Insurance
If you trust your spouse, you should get term life insurance. Just kidding! You should get term life insurance, especially if you are married with kids. The purpose of having term life insurance is to protect your dependents if you pass away.
The last thing that you want if you die is to leave your family financially unprotected. Term life insurance is the only type of life insurance that I recommend. It is a lot cheaper and a better deal than other types like whole life insurance. Do not get whole life insurance, please!
If you have a young family, you want to look at a 20 to 25-year policy. This policy would allow you to support your spouse and provide for kids through adulthood, even if you are not around anymore. If you have teenage kids and are working a plan to get out of debt, a 15-year policy could also be enough.
Chose a policy that is 10-12 times your annual income. For instance, if you are currently making $50,000 per year, get a term life insurance policy of $500,000 to $600,000. The younger and healthier you are, the cheaper they get.
If you have children and both spouses contribute financially to the household, both should get their own policy following the above guidelines. If you are single, you would need term life insurance if your parents or somebody else depends on you financially. If you don’t have any dependents, you probably don’t need to get term life insurance.
Consult with a trustable insurance agent to consider your particular needs and the options available in the marketplace. And always make sure you are comparing quotes from different companies before you make a decision.
13.- Cashflow College Expenses
Student debt is said to be America’s next financial crisis. Student loan debt has grown to $1.4 trillion, burdening the life experiences and expectations of many graduates.
Knowing this, the last thing that should be in your mind if you are planning to go to college or if you are preparing to one day send your kids to college is to get student loans.
Like I said earlier, if you live on a budget, you can start putting money aside every month for expenses such as college. Even if you can invest $100 a month on a kid’s college investment account, you would be way better off.
Through the course of 10 or 15 years, that money could add up and be enough to send your children to an in-state school and cashflow their education.
It pays to start early, and if you make this a financial goal now, you would be grateful and proud of yourself in the future.
14.- Donate A Percentage Of Your Income
It is good to make a good living, but what’s even better is to be generous. Letting go of your hard-earned money to contribute to a good cause will be rewarding for your spirit and your finances.
Detaching yourself from money is essential, it keeps you focused on what matters most. And, it is not the money. What you can do with money is what’s important.
Plan on giving away a percentage of your income. Many people believe in tithing 10% to their church. Supporting non-profit organizations is also a great way to be generous.
To make sure that you make donating a habit, add this expense as a category in your monthly income. This will ensure that you give with intention, and not only when there is money leftover.
Generosity is a fantastic financial goal to have in life, and it is also good Karma!
15.- Become Your Own Boss
I believe that ultimately, the only way to unleash your earning potential is to become your own boss. As an employee, you will, in most cases, have a cap on your salary.
There is nothing wrong with working for somebody else. Still, if you are unhappy every day at work, perhaps you need to look at ways to transition out and start your own business.
Now, starting a business and becoming your own boss is probably one of the hardest financial goals in life. But the effort is well worth it. You will know if you are selling products or services that you absolutely believe in that have changed your life for the better, and that can impact other people’s lives.
Keep in mind that it could take years to run a profitable business. So, if this is something that interests you, perhaps you can get it started as a side gig while you work full-time. This way, you can focus on reinvesting resources into your business to make profitable instead of relying on it to draw funds to live off.
In Conclusion: 15 Great Financial Goals In Life
Here’s the list of 15 great financial goals to have in life. Some of them may make more sense to your particular situation than others. And you may have more to add to the list. You can do that by dropping a comment at the bottom of this blog post.
1.- Budget Your Money On Purpose Every Month
2.- Live Below Your Means
3.- Build Up A 6-9 Months Emergency Fund
4.- Get On The Same Page With Your Spouse
5.- Stop Using Credit Cards
6.- Take At Least One Nice Vacation Per Year
7.- Invest 15% Of Your Income For Retirement ASAP
8.- Diversify Your Streams Of Income
9.- Pay Cash For Your First Car
10.- Never Finance A Vehicle
11.- Pay Off Your House Early
12.- Get Term Life Insurance
13.- Cashflow College Expenses
14.- Donate A Percentage Of Your Income
15.- Become Your Own Boss
Don’t feel like you have to embrace them all to find financial fulfillment. Instead, focus on two or three that you can achieve int the short term. As you can see, some of these require less time to accomplish than others. The point is to set the direction of what you want to achieve in life.
To help you make a plan, I have created a financial goal planning workbook that you can download. Print it out, sit down with your spouse if you are married, and use it to prioritize your own financial goals in life.
Related Articles To Reaching Your Financial Goals In Life:
- The Debt-Freedom Challenge
- Should You Teach Your Teenagers To Never Get In Debt?
- How To Uplevel Your Finances To Pursue Your Daydreams
- How To Pay Off Credit Card Debt For Good
- 7 Tips To Improve Your Financial Wellness
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