Setting goals is important. This applies to your career, life, and certainly your money. Many people know this intuitively but don’t really know where to start. Here are nine healthy financial goals you should consider:
- Have an emergency fund– start with $1,000 but ideally you’ll want three to six months’ salary for emergencies.
- Eliminate debt– There are many methods for this, whether that’s starting with your piece of debt with the highest interest rate, smallest amount, or largest amount.
- Start saving for retirement– For you, that might mean saving $20 per month, for others it might mean getting to the point where you’re saving 20% of their income.
- Diversify your income streams– Most people have income from their job, but maybe a good financial goal is to add another income stream, to increase your overall income. Some people refer to this as “developing a side hustle.”
- Spend only 20% of your income on discretionary expenses– This one is fairly self-explanatory. Some people spend way too much on eating out, entertainment, or things they don’t need. A way to keep your spending in check is to be intentional about how much of your money you spend on different things.
- Save for a down payment on a house– If you want to avoid private mortgage insurance (PMI), you’ll have to save 20%. Otherwise you’re looking at saving, in most cases, 3-3.5% if you’re a first-time home buyer. That’s a lot of money, and being a diligent saver.
- Donate money to charity every month– Being generous with your assets is very fulfilling. Maybe for you, you’d like to get to a point where you can give to good causes.
- Save for a car, vacation, or Christmas gifts- Rather than taking out debt, maybe you want to buy a big-ticket item with cash. This is a worthwhile goal, and will save you money in interest.
- Increase your credit score- You’ll use your credit score for many things, including being approved for loans, getting a lower interest rate on a credit card, and being approved for housing.
How WECU Can Help
MX is a free financial management tool offered to members from WECU. Using it will allow you to manage your money more effectively than with spreadsheets, paper or other online tools. You can identify your financial goals and track your progress toward achieving them. Through this interactive platform, you can watch your financial dreams become a reality.