Money goals are important to have as they give direction for our finances and help us outline what is important to us. Money does not necessarily make people happy, but it does help us pay the bills and acquire things we need and want.
Money goals, also known as financial goals, can be as simple as creating a budget or as goal oriented as creating a savings goal for a type of financial reward such as a trip or something you really desire. Having those types of financial goals gives direction for your money.
In my opinion, the ultimate money goal is to get your money working for you. That means that once you’ve paid your monthly bills, you take a certain allotted amount and invest that money. You need to invest in appreciable assets such as property, financial instruments, and rental properties. Ideally you should position yourself to live off the interest and passive income. That is the secret to building wealth and maintaining wealth, and that is how rich people live.
The key to wealth is in how you manage your money. You can make a ton of money per year, but if you are spending it all on depreciable items and not investing your money, you will have nothing to show for it. Wealthy people manage their money and live below their means.
Living below your means is when you spend less than what you bring in each month. A good way to ensure you meet your financial goals and live below your means is to create a personal budget and follow it. This can be difficult for some people as budgets can feel so constrictive. But when you look at it as in following a budget will help you achieve your financial goals it can be a gamechanger.
The basics of money goals
When establishing your money goals you need to figure out what is important to you. You need to have a clear idea of what you value in life and what would bring you joy.
Would it make sense for you to hoard all your money, leave it in a bank account and never enjoy it? Or do you want to make money, put some money away and enjoy an allotted amount?
Also knowing what you value in life is helpful when creating your money goals. If you are a parent, does saving for your child’s education matter to you? Do you want to go back to school or travel the world? Knowing what matters to you and what lights you up inside will help you determine how you want to plan for your financial goals.
Check in on your money goals periodically. Like everything in life, you can change what is important to you. As years pass by your wants and needs may change, and you can adjust your money goals accordingly.
Types of money goals
The basics of having money goals is to ensure you have a job or a stream of income coming in that will support you. It is important to have enough money to meet your financial needs such as rent, food, water, utilities, basic clothing, and toiletries.
Knowing the difference between wants and needs will help you in prioritizing your finances. Ideally you will have money left over at the end of the month that you can allocate to spending and saving.
How to set money goals
When you create values-based money goals you are ensuring that your money is supporting what is important to you. You may value family vacations and the memories that go with them.
What money goals are important to you?
Financial goals should be to live within your means, which means that you are spending less money than what you bring in. Ensuring that you are meeting your needs such as shelter, food, water, utilities, and personal hygiene is important. Most people can meet that and have money left over to spend on wants.
With the money that you have left over, you can decide how to spend it. This will depend on what money goals you have established for yourself and what is important to you.
Short term financial goals
Short term financial goals are set to meet within a year or two. Examples of short term financial goals could be to save for a vacation, save for a shopping spree, or save money for anything that might be important to you. These aren’t usually investment purchases; they are purchases that you save for that are small enough in dollar value but bring you some joy.
It could be money to pursue a new sport or hobby, save for a special outing or splurge on a new TV. Whatever it is, it is important that you have the money saved up before you purchase the item. Cash purchases are the best way to go.
Staying out of debt is important, because carrying debt costs money. The interest charges eat away at your disposable income and carrying debt is a waste of money.
Intermediate financial goals
Intermediate financial goals are usually attainable within 2-5 years. Buying a car and saving for a down payment on a house are common goals that qualify as intermediate financial goals. They aren’t quick wins and take some time to achieve due to the substantial amount required. These types of goals require commitment from the saver.
Long term financial goals
Long term financial goals typically take over five years or longer to achieve. Examples of long-term financial goals could be paying off your mortgage or saving for retirement. Long-term financial goals are important to set and follow because you don’t want to be caught in retirement financially unprepared.
Top recommended money goals to have
While you are planning your money goals out, these are the top examples of the type of money goals to consider.
Create a budget
The best money goal you can make for yourself is to create a budget and stick to it. Living under your means is when you spend less money than what you are bringing in each month. It’s the best money goal that you can make for yourself.
Create a debt repayment plan
If you owe money, the best money goal you can create for yourself is to pay off your debt. Carrying debt costs money and interest expense charges are always a waste of money. Nobody gets rich by paying interest expense.
Save for an emergency fund
An emergency fund provides a cushion or safety net for when unexpected and expensive surprises happen. It’s great to have savings to cover you when your car breaks down or you unexpected bills arise.
Plan for buying a house
Many people dream of home ownership as a money goal in their life. Home ownership can be expensive but for a lot of people it means security and something that is theirs. Saving for a down payment to purchase a home can be a smart money goal, provided it makes financial sense and you don’t become house poor by buying too much house. Never buy a house at the top end of what your bank approves you for or you will be maxed out and house poor.
Buy a car
Cars have been deemed essential these days, so if you depend on car ownership then buying a vehicle and paying cash for it is a good money goal to have. Buying a used car will save you plenty of money and you often can find the best deals.
Plan a vacation
Vacations are best when you pay for them upfront, that way you can enjoy the vacation while you are on it. Vacations are a great way to destress and take some time with family and friends for rest and relaxation. We need down time in our lives to avoid burnout.
Save for retirement
Saving for retirement is a money goal that everyone should have, and the earlier you start saving for retirement, the better off you will be. Retirement living without financial stress is a goal that should be at the top of your list as government support programs have seniors living below the poverty line. Ensuring that you are financially comfortable in retirement is an important money goal to have.
Invest your money to create passive income
I truly don’t think there is anything better than creating passive income. Passive income is when your money is making money for you. This happens through investments such as bonds, stocks, rental property, or any other investment vehicle.
Save for your kids’ education
Many parents prioritize saving for their children’s education and make it a top money goal. Although it is a personal choice, given the fact that education is so expensive, it does help give your children the best possible start in life.
Save for a rental property investment
Rental properties are a great way to purchase an asset, the house, and have it generate money for you at the same time. Not everyone is meant to be a landlord, nor does the idea appeal to the masses. But this is a good money goal to have if real estate investing is your idea of fun.
These are just examples of the types of money goals you can create for yourself. Ultimately it is you who decides what goals are going to work best for you.
Having smart money goals that are going to put you ahead financially are important, and the best thing you can do for your financial future.
If you are interested in educating yourself and building your financial future, sign up for my course, The Personal Finance Money Method. Click on the image and learn about how you can create the financial freedom that you’ve always dreamed of.
