I'm kind of a goal setting freak. Some people do New Year's resolutions. That's great, but I think you need to revisit your goals on a more consistent basis. For me, that's every 30 days.
Let’s establish up front that goals are something more substantial than dreams or wishes.
They can start with dreams or wishes, but they have an action plan behind them something that spells out how we convert a desire into something real.
That’s especially important when it comes to financial goals. Since they require regular investments of money and effort over a long period of time, you need to have workable plan to bring them to reality.
Start by setting some financial goals. If you’ve never thought much about this, here are 10 financial goals that everyone should have especially for 2018.
1. Have a Well-Stocked Emergency Fund
We normally think of having an emergency fund as being a short-term financial goal. And from a mechanical standpoint, that’s true. However, an emergency fund has important long-term benefits, which is why it’s one of the good financial goals that you should plan to achieve.
Here are just some of the benefits that a well-stocked emergency fund can provide you with throughout your life:
2. Completely Get Out of debt
The great thing about this goal is that anyone can do it, regardless of income or wealth level. And if you want to get the most out of your finances, it's virtually a requirement that you get out of debt.
For the moment, let’s ignore the good-debt-versus-bad-debt debate. At some point in your life, all debt is bad debt and needs to be paid off. That includes the mortgage on your home. Although the purpose of that debt may be noble at the beginning, it’s no less a drag on your income than any other debt as time goes on.
There are more reasons to get out of debt than I can list here, but here are just a few of them:
3. Plan For Early Retirement
When I started as a financial advisor and finally grasped the concept of compound interest, I was determined to put myself in situation where I could retire by the age of 50 if I wanted to. I don't know if I'll ever really retire, because I absolutely love what I do.
Even if you absolutely love what it is you do for a living, planning for early retirement is one of those top rated good financial goals. Here’s why:
4. Create Multiple Income Streams
Even if you love your job, creating multiple income streams is a form of income insurance. For that reason alone, it needs to be on your list of good financial goals.
But here are even more reasons:
5. Have Enough – But Not Too Much – Insurance to Cover Contingencies
Insurance is something of a tough call. A lot of people don’t have nearly enough coverage, while many others are paying too much for the coverage that they have. Striking a balance between the two is another of those good financial goals.
Here are some strategies in striking that balance:
6. Be Able to Live on Less Than You Earn – No Matter What
I’ve covered this topic in other articles, but it is well worth repeating here since it is one of the most necessary of all good financial goals. By learning to live on less than you earn – no matter what – you will always have plenty of income. That means that you’ll have plenty of income for savings, investments, and for paying off debt.
It’s important to always be on the hunt to increase your income. But that strategy will only be effective to the degree that you are able to live on less than you earn, so that you can put the difference to better use to improve your life.
7. End Any Addiction to Stuff That You May Have
This may not be a financial goal in and of itself, but it is an obstacle that will stand in the way of all good financial goals, no matter what they are.
An addiction to stuff can be like a financial parasite. A disproportionate amount of your income and financial reserves will go to pay for your need for stuff.
This will present several problems:
8. Create A Plan to Do Work That You LOVE
Ultimately, the purpose of improving your finances should be to provide you with independence in your life. That means that it should afford you the ability to do what you want, when you want. If that isn’t one of the good financial goals, then I don’t know what is.
Getting out of debt, preparing for early retirement, developing multiple income streams, and ending your addiction to stuff, should clear the way for you to be able to do the kind of work that you really love. That should be true even if that work doesn’t pay nearly as much as you're being paid now.
But that will be possible only if you have no debts to pay, if you can live on less than you earn, and if you have a large investment portfolio to back you up.
Why is doing work that you love a worthy financial goal? Very few people will actually be retiring to the beach for a life of blissful nothing, no matter what you see on TV. If nothing else, it’s likely that you will work just as a matter of personal satisfaction – or an attempt to avoid boredom.
Since you will be working all of your life – one way or another – the work that you do shouldn’t just be about earning money. It should be something that makes you feel good about your life, and good about the person you are.
9. Get Comfortable Sharing Your Good Fortune
If you can’t get comfortable sharing your good fortune with people who are less fortunate – perhaps out of fear that you will end up broke as a result – then money has complete control over your life. It doesn’t matter how much money you amass in your life, it should never control you.
There are numerous reasons why giving to others will be good for you:
10. TAKE ACTION!
It doesn't do us any good to read finance books, articles, blogs, listen to podcasts, and watch videos on how to improve our finances when we don't take action. Make it a habit to put into practice just ONE thing you learned. It can be something as simple as putting $1 into a jar at home everyday, or increasing your retirement contributions at work by 1 percent, but whatever it is... JUST DO IT! Small steps will equal to something that can totally transform your life in the future.
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