Handling money and creating money goals doesn’t have to be a scary thing.
There is a stigma right now that money is a bad thing. Think about it. We are told things like “money can’t buy happiness”, or “more money more problems”.
What about looking at money in a different way? Maybe money doesn’t buy happiness, but it sure can help with stability, comfort, and experiences. The same can be said for “more money, more problems”. Maybe the reason more money causes more problems is that people don’t budget properly or know how to limit spending.
Regardless of your outlook on money, it does not need to be such a scary thing.
In fact, financial goals are the 2nd most popular New Year’s resolutions, right after exercise and weight loss. Clearly, people want to manage money better, whether is saving money or getting out of debt.
Setting good money goals can eventually lead to financial freedom, which ultimately:
- Gives you peace of mind
- Helps you provide for your family better
- Allows you the freedom to travel
- Prepares you for large expenses such as an education or a house
- Gets you out of the paycheck to paycheck cycles
- Gives you a chance to have money saved in the bank
These are just a few of the many reasons it’s important to establish good money goals.
To achieve this financial freedom, here are 10 important money goals to set right now.
1. Create a solid emergency fund
If you haven’t already done so, get yourself set up with an emergency fund and start putting money into that each month.
Emergency funds are vital. In a way, an emergency fund is a special savings account because it holds money until you need it for an emergency.
A popular rule of thumb is to have at least enough money saved to cover up to 6 months of you and your family’s entire living expenses.
Emergency funds are often in the back of peoples minds because it can be difficult to allow so much money to just sit in the back unused. However, if something happens such as a medical emergency or an important appliance breaks in your home, you won’t have to stress out about where to get the money from to pay for the expenses.
Even worse, if you lose your job, you will have a cushion of money to help keep you on your feet.
An emergency fund also helps you sleep better at night knowing that if money gets a little tight, there are still finances set aside just in case.
2. Pay off your student loan debt (talk about serious money goals!)
Student loan debt is a huge burden. We can all probably agree on that.
According to PEW research center, Americans owe more than $1.4 trillion in student loan debt.
The average person has approximately $40,000 in student loan debt and owes around $350 per month to make their minimum payment.
To put these numbers into perspective, there is now more student loan debt than there is credit card debt. In fact, student loan debt has surpassed credit card debt by approximately 3 billion dollars.
So, why is paying off your student loan debt one of the best money goals?
First, a little bit about my story with student loan debt. When I graduated college with my undergrad degree in Communication, Public Relations, I was $30,000 in debt and my monthly minimum payments were over $500!
While most people would panic at those numbers, I had been prepared. As soon as I graduated, I crafted a plan to pay off my debt within 2 years so that I could live life financially free.
Through dedication, stinginess, and a ton of savings, I successfully paid off my loans in my 2-year goal. That meant that I was financially free by the age of 23.
While many people tried to convince me that student loan debt is “good debt”, I still recognized that debt is debt. I didn’t want to live the next 10 or so years owing money to the government. I wanted to be able to spend my money knowing that I didn’t have to pay $500 at the start of each month to a balance that only covered the intended interest.
Since becoming financially free, I have loved telling others in student loan debt how I achieved freedom in such a short amount of time.
Nothing feels better than being debt-free. This is why paying off your student loan debt is such a hugely important money goal that should not be ignored.
It’s time to do better than just paying the minimum owed each month for the next 10+ years. Take care of that debt asap!
3. Get out of credit card debt
Speaking of debt, credit card debt should not be ignored. While student loan debt tends to be ‘good debt’, credit card debt is definitely the bad debt. However, I still believe that debt is debt regardless of how it’s labeled.
If you’re in credit card debt, you’re paying interest, which is just more money out of your pocket in the long run. Trust me, it isn’t worth it. It’s absolutely okay and realistic to want to live debt free, even if people try to convince you that “some debt is good for building credit”.
I’ve talked to so many people who have just accepted the fact that they will be in debt the rest of their lives, but it doesn’t have to be that way. With dedicated monthly payments of just a little bit more than your minimum balance owed, you can get out of debt sooner. This is a good money goal that is attainable and easy to do.
I do want to acknowledge that everyone’s financial situation is different and it may be more difficult for some to put more money towards paying off debt. That’s why it’s so important to sit down and figure out a financial plan that works for you and your family while also obtaining a financially stable life without living paycheck to paycheck.
Budgeting does not have to be a bad ‘b’ word.
Many people think that they only need to budget if they have poor spending habits. That’s not true.
While it helps to have a budget to get your spending under control, everyone one, regardless of their financial status, should set a money goal to have a budget. Having a budget is a good money goal because it helps you save money, control your spending, and see where you need to cut out unnecessary purchases.
Before I settled into a budget that worked for me, I tried other outlets such as using budget apps to track all my spending or documenting everything on an excel sheet. None of that worked for me. It all felt too tedious and overwhelming.
Instead, I laid out all my income and expenses and picked a realistic number that I could save each month, and I stuck to it. Sometimes that number was more because of overtime work, but I never saved any less than the number I set for myself. And guess what, this worked for me.
By saving money like this, I was able to pay off my student loan debt in two years, and I saved enough money to comfortably start a business without it hurting my wallet.
How can you save money each month? It starts with a budget. If the reason you haven’t started saving money before was that you didn’t have much money left over after paying your bills, or because you live a paycheck to paycheck lifestyle, a budget will help make space for savings.
The most important part is your budgeting money goal is to decide you’re going to start a budget and stick to it. I guarantee if you stick to your budget goals your savings will grow in no time and so will your peace of mind.
5. Save like your finances depend on it
My absolute favorite quote regarding finances is from Warren Buffett, “Do not save what is left after spending; instead spend what is left after saving.”
I cannot express enough how important a savings account is. Your money should not sit in your checking account. Even if you feel like you have a grasp on your spending habits, money needs to be frequently set aside into a savings account.
The reason it’s a bad money habit to not have a savings account is that we live in a random world. At any moment, you could have a financial emergency. Would you be prepared?
A savings account helps to minimize money risks. While you can’t avoid things like cars breaking down, medical emergencies, or hidden fees, you can be prepared with money that was intentionally put into a savings account.
Personally, I have two savings accounts. One is for fun, and one is for emergencies. I tend to stick by the rule of thumb with havings 6 months of living expenses saved in my emergency fund. My other savings will just grow and grow until I want to take a trip or buy something big like a house (or a wedding… March 2019!).
6. Find a stream of passive income
My favorite money goal is to set up as many streams of income as possible. Warren Buffet once said, “If you don’t find a way to make money while you sleep, you will work until you die.”
This is where passive income comes in to play.
How cool would it be if you were able to make money while you are sleeping, or hanging out with friends, or at the movies? That is the beauty and importance of passive income.
There are many ways to make passive income such as blogging, Amazon FBA, affiliate marketing, online courses, and running an Airbnb.
While it typically takes some work to initially set up your stream of passive income, it is completely worth it when you are able to still make money while you are on vacation.
If that isn’t money goals, I don’t know what is.
7. Figure out what you’re saving for
We all know that we need to save money, but sometimes saving money is not very exciting. After all, it’s money you’ve earned that just sits somewhere out of sight.
To make this money goal more exciting, figure out exactly what you are saving for. A lot of people save up to get out of debt, pay a down payment on a house, get a new car, or take an awesome vacation.
If you need the motivation to save, just think about it as investing in your future trip to Europe or your future dream house. Doing this gives every single dollar a purpose and brings excitement to the process.
8. Utilize cash back reward credit cards
I love credit cards and am a huge advocate for them. With that said, credit cards have to be used the right way into order to work in your favor.
There are a few ways to use credit cards to your advantage. The first way is to get a cashback reward credit card.
I swear by cashback reward credit cards. Every single purchase I make is on a rewards credit card that earns me points. During the last few years, my fiancé and I have earned hundreds of free dollars just by using our cashback reward cards. With our travel rewards credit card, we have been able to get free hotels, Uber’s, and flights.
The next and more important way to use a credit card to your advantage is to always pay the card off, every month. By doing this, you never pay the interest rate.
Interest rates are how people get into such bad debt.
Credit cards can easily top the list of bad money habits because many people use it as free money. Credit cards are not free money. I repeat credit cards are not free money! They must be paid off. Every month that they go unpaid, or the minimum only gets paid, you are losing money. It’s not worth it.
That is why I pay my credit card off in full every month. I have never paid interest on a credit card and I never will.
I simply use my credit card because of the benefits of earning free money. It has been amazing. #moneygoals
9. Treat yourself at least once a year
Sometimes we can get so caught up in our money goals that we forget to treat ourselves.
Any Parks and Rec fans? If you’re familiar with the show, you probably remember the ongoing gag, “Treat yo’self”. If you are unfamiliar with the show, there was this great ongoing saying that gave the characters an excuse to buy ridiculous and expensive things because they deserved to treat themselves.
While I don’t think you should treat yourself as much as they do in Parks and Rec, I do think we need to give back to ourselves at least once a year. This can be in the form of a gift, vacation, or just taking a few days off.
10. Monitor your spendings every month
Monitoring your spending is not the easiest thing because it is kind of time-consuming. However, it’s extremely eye-opening. It’s also a lot easier these days because of online banking.
The reason monitoring your spending is a good money goal is because you don’t realize how many days of the week you buy a burrito or burger (super guilty) until you see the itemized purchases in your online banking.
I once talked to a couple who tracked their spending and realized that they were averaging $700 a month just on eating out! Now, that’s bananas! Talk about bad money habits.
However, the only reason they were able to see that bad money habit was that they started to track their spending.
It might be hard to do at first because you might not want to admit to yourself that you sometimes go crazy with spending. But, remember, we don’t want to be another debt-related statistic.
So, block out some time to take a realistic look at your habits and start fixing it!
What are your money goals and what are you doing to achieve them?