We all dream of financial security, a life where we don’t have to think about loans to make large purchases or to cover us until the next paycheck. However, to get to this point, you need a plan.
Setting financial goals either short-term, mid-term or long-term, will bring you closer to where you want to be, reign in your expenditure and ensure that you’re sufficiently taken care of upon retirement.
Below are financial goals you should begin to set right now.
1. Create a budget
A budget will show you how much money you have coming in and how you’re spending it. This will help you narrow down where your money is going so you don’t keep wondering why your salary has run out so fast and stop you from living paycheck to paycheck. This information will help you see where you need to cut back to make more money available for paying off debts, increase your savings and make investments.
There are many apps you can use to create a budget or go old school and use a spreadsheet.
2. Live within your means
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So as to live within your means you need to spend less than what you earn. This helps to reduce incidences when you need to borrow money to make it through the month. As a result, you reduce your debt.
3. Pay off debt
Debt is a constant headache that dogs many. Once you start earning an income, paying off debt should be one of your highest priorities. Start by writing down who you owe money and how much you owe. Then make note of each loan is due and how much is required for each monthly payment. With this information, make a plan to pay off your debt. This money could come from the areas of your monthly budget that you’re cutting down.
Once you pay off your debt, make every effort to avoid getting into debt again.
4. Learn your credit score and improve it
If you want to make a large payment, say take a mortgage, you will need a loan. In order to qualify for lower interest rates you need to have a good credit score.
5. Have an emergency fund
You need an emergency fund to pay for unexpected expenses or to provide some cover should you suddenly lose your source of income. Set a goal, an amount and by when you want to have saved it. Once you meet this goal, increase the amount. For example, have an emergency fund of three months salary and once you meet that goal make it six months salary.
6. Save up for retirement
Whether you contribute monthly to your pension or not, set aside some money for your retirement. To do this, estimate how much you will need upon retirement. To get an idea of how much your living expenses will be, look at the budget you created. Remember to factor in inflation and how much you will receive from the retirement benefit authority.
7. Look for ways to grow your income
We all know that it’s practically impossible to survive on one salary especially with the cost of living continuously going up. As you seek financial security, consider getting a side hustle or take up more responsibility at work so that you can increase your income and meet your financial goals such as paying off debt and increasing your savings.
8. Set up an education fund for your child
Education is expensive. And the older your children get, the more money you’ll need to shell out to pay for education. An education fund will help you meet these financial needs without either you or your child being forced to take a loan.
9. Get life insurance
Should you pass away suddenly, a life insurance policy will give your next of kin a safety net as they get on their feet. Speak to an insurance broker to help you get a policy that meets your needs and whose premium and monthly payments are within your means.