As a personal finance coach, I work with young professionals to set and accomplish their financial goals. From a goal to be debt-free to a goal to be a millionaire by 30, my client’s financial goals range wide but all have one thing in common: a good financial plan gets them there faster.
My financial dreams have changed throughout my life and so have my financial goals. When I was younger I had simple savings goals like $1,000 for a trip to Alaska but as I moved through my younger years they slowly started to grow. I had goals of maxing out my Roth IRA, always having money set aside to travel, and saving $80,000 for a down payment. As I accomplish goals I find new ones. My current goals are to max out my 401(k), have a million dollars in my investment accounts, and buy a new car.
The point is, as life changes, your goals change. You need to master setting and accomplishing financial goals throughout your life.
The challenge I see most is knowing what goals to set. When you are in your 20’s there are so different ways you could go with your life. Do you want to quit your job and travel, do you want to buy a house, or maybe you want to pay off your student loans and upgrade your car? So how do you know what you should be focusing on?
Here are some common financial goals I see my clients setting:
- Savings for a move: You want to live somewhere new while young and flexible. That is going to cost money. We need to figure out how much it will cost and a timeline of when you can make that happen.
- Buying a new car: The car your parents bought you in high school is on its last leg so it’s time to save up to buy a new car. What kind of car do you want, how much car can you even afford? Do you need to prioritize this now or can it wait a few years?
- Paying off your credit cards: You found yourself getting a little carried away with your credit cards after you graduated college and now it’s time to dig yourself out of that debt. Where do you even start?
- Buying a house: It might be 5 years down the road but you know you need to start saving for a down payment now. How much should you save and when can you afford to buy?
- Traveling: You want to travel while you are young. Can you afford to take time off work to travel big or do you want to plan a trip or two a year? It’s going to take cash to make it happen. How can you hit the road fast?
- Saving for Retirement: You have listened to me say over and over again that you should start early. Your company has a nice 401k match, how much should you be investing?
- Planning a wedding: You are a bridesmaid in 5 weddings over the next 3 years, how are you going to afford all the dresses, flights, and bachelorette parties and still save for your wedding down the road?
I could go on and on. There is no shortage of dreams and goals especially when you are young. And it is hard! When you are in your 20s life is pulling you in a million directions. It can be stressful just trying to decide which direction to go, let alone making a plan to get you there.
That is why it is so important to set strong financial goals. The key though, is to make them flexible. Because as you know, life changes a lot when you are young and I want your money to be able to change with you.
We all know what a S.M.A.R.T. goal is by now but in case you need a refresher. You want your goals to be:
- Specific: Clearly define your goal.
- Measurable: Determine how you’ll track progress.
- Achievable: Set realistic and attainable goals.
- Relevant: Ensure the goal aligns with your values and long-term objectives.
- Time-bound: Set a deadline for achieving the goal.
Let’s say you want to pay off your credit card debt and save for a trip to Italy. How are we going to get there?
I will pay off $3,000 of credit card debt over the next 5 months by putting $600 toward it each month. Then I will put that $600 toward my trip to Italy so in 9 months I will have no credit card debt and have $2,400 to spend on my travels.
This is a great goal. To make a goal like this you need to do a few things.
- Get clear on your values.
- Understand your current financial situation
- Create a budget with your values in mind.
- Determine how long it will take you to accomplish your goals
- Create a plan to get there
- Track your expenses
- Set up automated savings
- Monitor and adjust your goals regularly.
Is it all overwhelming? Start small and work on staying consistent. When I set my goal to save $80,000 for a down payment, I thought it would take years but as I started saving I realized that the time would pass anyway, and having a goal I cared about helped me feel empowered with my money. If you can master your financial goal setting, the possibilities are endless.
Do you want personalized guidance to help you not only set these goals but also accomplish them? I invite you to join my 1:1 coaching program where you get personalized guidance every step of the way. You can sign up by scheduling a Q&A call at the link here.
Whatever your goals are, a little dedication and a good financial plan will get you there.
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