The new year is a perfect time to take control of your financial life. In part one of our top money goals article, we discussed developing a financial plan, creating a budget, setting up an emergency fund, and working to eliminate debt. Those are cornerstone topics for healthy finances. So let’s continue with part two about money goals to set for yourself right now so you come out of 2021 wealthier and wiser!
Think About Retirement & Start Saving for it
For millions, retirement seems like a far-off idea. For others, it may even seem like an impossibility. The truth however is, retirement is an important financial goal to work towards. Even starting small, if done early enough, can result in long-term gains. To do that, you need to save for retirement. Start by figuring out how much money you’ll need to save for retirement. There are many retirement calculators available for free online that can give you a good baseline of what your financial needs will be. After you’ve determined what you’ll need, start looking for ways to put money away towards this goal.
One of the best ways to fast-track your retirement savings is through an employer-sponsored 401(k) account. That’s free money for you, often a 100% match. If an employer program isn't available to you, simply start with an account online. There are many self-directed accounts available such as through Fidelity, Vanguard, Schwab, or E*Trade. Even an app such as Acorns can get you started in the right direction.
It’s simple. You won’t become wealthy simply by putting your money into a savings account and crossing your fingers. In fact, long-term, you’ll likely fall behind financially, due to inflation and the rising cost of living. The way to overcome this is through smart investing, and no matter what vehicle you choose –– stocks, or real estate, for example, investing a portion of your earnings should be a money goal that you set for yourself.
The one caveat here is to consider your current income and your debt. If you’re struggling financially at the moment and have a lot of debt, it doesn’t make sense to jump into investing your money. The cost of your debt (interest rate), likely will far exceed any earnings you’d realize through investing, so the smartest thing you can do is pay off high-interest debt first, then, then look to invest.
Purchase a Home
Throughout history, property ownership has been one of the pillars of building wealth. Committing to purchasing a home is a significant expense, but a smart one, as long-term, as the value of your property increases, so will your net worth. Buying a home for many also means more than just building wealth or setting money goals –– it means providing for families, and creating memories.
If the actual purchase of a home is not reasonably within reach in the short-term, you can set it up as a mid- or long-term goal. Maybe saving for a down payment can be your short or mid-term goal in the meantime. However, you plan it, buying a home is a money goal that will pay off both financially and emotionally.
Start A Side Hustle
Part of planning goals for your money should be ways to earn more of it. The digital economy has opened up a whole new world to anyone with a few extra hours to spare every month. The popular cultural lexicon for this is starting a side hustle, and virtually anyone can find something that will generate an extra couple hundred dollars per month.
More traditional side hustles might include jobs such as waiting tables or doing yard work, which is still viable and can be lucrative. With digital and online platforms, people can now earn additional income through shopping and delivering groceries, teaching English, driving for ride-sharing services, or utilizing a current skill set, such as copywriting or graphic design, just to name a couple. Whatever you decide to do, just committing a few hours per week to a side hustle, is a money goal that can help you achieve many of your other goals much more quickly
Start A Business
Starting your own business might seem intimidating, but it doesn’t have to be. Setting a goal of being an entrepreneur and growing your income can be as simple as running a Shopify store or a YouTube channel. Separate from side hustles, these kinds of roles are sources of income that may take more time to build, but belong solely to you and have close to unlimited growth potential. Of course, you could start a more traditional business, such as a construction firm, or a bakery, for example, but whatever it is you decide, owning your own business can be lucrative and rewarding. There are also tax benefits that can be realized as a business owner as well, so if it’s something you’ve always considered, think about how becoming your own boss can fit into your financial goals.
Grow Your Net Worth
Here’s a financial goal that you may not have considered: grow your net worth. An individual’s net worth is simply the difference between what you own and what you owe. Think of it as a game –– when it comes to wealth creation, the objective is to increase your net worth. To do this, you have to reduce your debt and increase your assets. Do you know what your net worth is currently? If not, take some time to add up your assets and deduct your debts to determine it. Want an easy money goal for this year? Then set a goal for what you want your net worth to be by the end of the year. It will keep you motivated, and just may help you achieve many other financial goals that you set for yourself.
Plan For Your Children’s Future
For anyone with children, an important money goal is to save for their future. This can take many forms, from saving for their college education through a 529 savings account, or opening an investment account in their name so that they reap the long-term benefits of compounding interest. Maybe it helps them buy a home or bootstrap the start-up of a business when they’re older, but whatever it is, it will be immensely beneficial to them in the future.
It’s never a bad idea to invest in your education. Whether that’s getting a degree or simply leveling-up your skill set to increase your professional value, investing in yourself is one of the best goals you can set for yourself. And to take it a step further, furthering your financial literacy is a money goal that will yield great dividends throughout your lifetime. Start by finding a good book on personal finance, or enroll in an online course to learn investing, for example. Whatever you do, keep learning, growing, and expanding your financial knowledge.
The new year is a perfect time to take control of your financial life and the best way to do that is to set some money goals and develop a plan for your finances. Take some time to think about your long-term goals in every area of your life, and let that be a roadmap for planning your short- and mid-term financial goals to help you get there. Be clear about what you want, why you want it, and give yourself target dates to achieve them. As you begin to hit your goals, you’ll be motivated to accomplish even more.