10 Financial Goals Everyone Should Have No Matter Your Age
Some financial goals are timeless. Which one of these have you already successfully achieved and which ones are still on your list to accomplish?
There are just some financial goals that never get old… or young… depending on how you think about it. Regardless of your age or stage in life, certain financial goals have withstood the test of time and are good to put into practice and maintain for decades.
Here are 10 financial goals everyone should have at any age and why.
1. Get Out of Debt and Stay Out of Debt
Owing others for the things you have is never a good situation. The borrower is always slave to the lender. The cost of borrowing is so steep, especially with high interest credit cards and loans. Better to pay down all your debts and then stay out of debt. That level of financial freedom is a good goal for anyone to strive for.
2. Build and Maintain Good Credit
Even though I don’t want you to take on debt, maintaining good credit is important for those purchases that are simply too difficult to afford in a cash payment. Buying a home or other types of real estate will likely be the biggest financial purchase you make. Being able to lock in a low interest rate on a large purchase will save you tens of thousands of dollars in the long run.
Besides, using credit has it’s perks when credit card companies offer cashback and other rewards programs. Use credit responsibly and you can receive kickbacks from spending, maintain a good credit score, and avoid debt.
3. Max Out Your Retirement Contributions
At any age leading up to retirement, try to max out your retirement contributions and take advantage of compound interest. The younger you start, the better. But even your thirties and forties allows your money time to work even harder for you.
4. Have an Emergency Fund with 6 Months’ Worth of Living Expenses
There is no telling what will happen in life and you want to make sure you can cover your expenses. Whether it’s the loss of a job, health concern, or some other unexpected financial and life disruption, you’ll be glad you had money earmarked for that very purpose.
5. Get Life Insurance
Life insurance protects those against financial hardship in the event that something happens to you. So, if you have people you love – get life insurance. There is no good reason not to.
6. Live Within Your Means
Whether your twenty-something or seventy-something, living within your means mean living within your means. Don’t overspend your financial resources, else you risk falling into debt that you may or may not be able to easily dig yourself out of. If you live beyond your means, it can have devastating consequences for you and your financial future.
7. Prioritize Your Money By What’s Important
Know why money is important to you and then align it with your values. There is no sense spending your money in areas that don’t bring you joy. Of course this is easier said than done, we do all have to pay taxes! But what I’m talking about are the spending categories of your life that you can control.
8. Delay Gratification
Buying things impulsively can lead to a lot over overspending that delivers short-term gratification that is quickly lost. The benefit of the purchase does not outweigh the potential consequences of limiting your ability to spend your money in a way that could have resulted in greater joy and happiness.
9. Minimize Your Tax Exposure
There are plenty of legal ways to minimize the amount of taxes you pay. Work with a financial advisor or CPA and see which tax bracket you fall into and if there are things you could be doing that would help you reach your financial goals and reduce the amount you owe in taxes. Chances are there are incentives you’re eligible for!
10. Practice Generosity
Giving of one’s resources to a cause or charity that you believe in can be one of the greatest gifts of financial freedom. When you have enough that you can generously share with others, that’s a pretty powerful outcome of setting financial goals.
Scott Frank is the founder of Stone Steps Financial, a fee-only financial planning firm located in Encinitas, California. Scott started Stone Steps to help young professionals and families understand their financial lives and position themselves to reach their fullest potential.
Scott and I became friends through NAPFA and I asked him to write some thoughts on financial goals as a guest topic for this site.