Sure, you want a new car, to buy your own house, pay for your future children’s college tuition and retire on an exotic island; but have you figured out a plan for reaching those goals? Most likely, you haven’t. You may be thinking that you are too young to worry about those things or with the money you make now life goals aren’t unattainable.
Well you are never too young to get a financial game plan going to make the unattainable goals easily obtainable! The CGS Team is going to give you some great starting points for establishing your wealth goals and creating a plan to reach them. Remember, things don’t happen overnight (unless you win the lottery), so expect hard work, dedication and a lot of saving!
First Things First
Before we start talking about your wealth goals and how to get them, assessing your financial situation is a must. A budget is a great way to start, but if you don’t have one yet then keep it simple by writing out all of your income and all of your expenses. Also write any available savings, credit card balances, and additional loans and debt. Once all of your financial information is in front of you, you will have a better understanding of what your next steps should be.
Credit Cards & Your Emergency Fund
Before picking your wealth goals, if you have credit card debt, then everything else will need to be on the back burner. Credit card debt is costing you tons of extra money because of the monthly interest charges. Your first task should be to get rid of your credit card debt as quickly as possible. It is understandable to feel overwhelmed with your debt, check out the Don’t Let Debt Get You Down article to get motivated about tackling your debt!
After your credit card debt is taken care of, your next plan of action should be to build your emergency savings fund. Another financial must have, your emergency savings fund will come in handy for any unexpected financial obligations like new tires, computer repair or any other random expense. Your emergency savings fund will take care of your bills in the event of a job loss. With that being said, your savings fund should be at least 3-6 months’ worth of bills.
Pick Your Goals
Credit card debt and emergency savings funds are pretty tough tasks, but once you have knocked those out you will be ready to pick the finance goals you want out of life! When picking your finance goals, separate your short term goals from your long term goals. Short term goals are goals you want to achieve within the 12 months. Long term goals are goals that won’t be achieved until over a year and a half.
Do you want to start saving for retirement? If you already have a job then this should definitely be a short term goal. Contact your company’s HR department to figure out your options. Most of the time you can start contributing to a 401k by the next pay period or two.
Do you want buy a luxury car? Depending on your financial situation, this may most likely be a long term goal. Start researching prices of the car you want. Do you want new or used? Are you considering financing? Once you have your goal decided, you can start researching to help your planning process.
Do you want to save for your first apartment? Do you want to buy a Gucci bag? Do you want to retire at 50 instead of 70? These are examples of wealth goals.
Plan and Achieve Those Goals
As we mentioned earlier, once you have a few short term and long term goals decided, you can start planning for them. Sometimes it is hard to save for multiple goals at the same time, but it’s not difficult to focus on one goal at a time. Write out each goal and the estimated cost to achieve that goal.
Do you need to achieve the goal in a specific amount of time? Start making adjustments to your income and expenses to help fund the saving of your goal. If you need assistance with adjusting your finances to help reach your goals, consider the CGS Personalized Budget Portfolios. The budget portfolios are created based on a specific financial goal and allocates your income and expenses to help you achieve the goal by your target date.
If your goals are about 5-10 years away, consider investing any extra money you have in stocks or mutual funds. Most people only invest when they save for retirement, but opening your own brokerage account will allow you to invest outside of saving for retirement. Start off with a discount brokerage firm like Charles Schwab. You can direct deposit $50 each check into the account and start experimenting with low cost stocks, bonds or mutual funds.
You can also put your money into high interest savings accounts. Regardless of the amount of time you have to achieve your goal, putting any cash you have into a high interest savings account is smart. This will allow your money to grow with interest. The more money you add to your account, the higher (and faster) it will grow.
The savings account with the highest interest rates are online savings accounts. They offer high interest rates because they don’t operate out of brick and mortar stores. This also means you can’t simply walk into a branch or ATM and pull cash. However, since your money is growing until you reach your goal, you shouldn’t have to pull it immediately. Once you reach the goal you can simply have the money transferred to your primary bank or credit union.
You may not be thinking about your finance goals yet, but you should definitely start! Regardless of how big or small your goal may be, forming habits to establish and reach your wealth goals will help you as you get older. What are your wealth goals? Do you have any tips for staying focused until you reach your goals? Leave a comment below! We would love to hear everyone’s goals!