No matter your age or stage in life, it’s never too late (or too early) to start saving for your future. But how do you know how much to save, and what should you be saving for? That’s where financial planning objectives come in. By creating a list of financial planning goals, you can set yourself up for success both now and down the road. Not sure where to start? Here are four financial planning objectives everyone should have.
- Build an emergency fund.
If you don’t have any money saved up for unexpected expenses, you’re not alone—but that doesn’t make it any less important. An emergency fund is key to weathering financial surprises, whether that’s a major car repair or a month of lost income due to a layoff. Experts recommend having enough money saved to cover 3-6 months of living expenses, but even a small “starter” fund can help you sleep better at night knowing you have a little wiggle room in your budget.
- Get out of debt—and stay out of debt.
Debt can feel like handcuffs, weighing you down and preventing you from reaching your other financial goals. That’s why getting out of debt—and staying out of debt—is one of the most important things you can do for your finances. If you’re not sure where to start, try the debt snowball method: list your debts from smallest to largest, and then make minimum payments on all but the smallest one. Once that debt is paid off, take the money you were using to make those payments and put it towards your next smallest debt, and so on until all your debts are paid off.
- Invest in yourself—literally.
One of the best investments you can make is in yourself—specifically, in your future earning potential. Whether that means going back to school to get a degree or taking courses to hone your skill set, investing in yourself now can pay dividends down the road in the form of increased earnings and job security. And if you’re worried about how you’ll pay for it, remember that there are many options available including grants, scholarships, and student loans.
- Save for retirement… but don’t forget about other savings goals along the way.
You’ve probably heard that you should start saving for retirement as early as possible—and that’s true! The sooner you start saving, the more time your money has to grow through compound interest. But while saving for retirement should absolutely be one of your top priorities, it shouldn’t be the only thing on your mind when it comes to saving money. Make sure to also set aside funds for shorter-term savings goals like buying a house or saving for a rainy-day fund.
Saving for your future may seem like a daunting task—but it doesn’t have to be! By setting some simple financial planning objectives, you can get started on the path to financial success without feeling overwhelmed. Keep these four objectives in mind as you begin working on your own personal financial plan: build an emergency fund, get out (and stay out) of debt, invest in yourself, and save for retirement while also maximizing contributions towards shorter term savings goals. Taking small steps now can pay off big time later—so what are you waiting for?