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Below are 7 Financial Goals you need to make for your future. It won’t be like your New Year goals when you make new goals and forget them in a month (if not in a week).
If you have read my article on goal setting, you know how much I like goal setting. Yes, I like goal setting and I believe it’s extremely essential to help you get to where you want to be in life. You can’t just make some goals and never visit them again. It doesn’t work that way.
The simplest way to Financial Independence is by having a structure and knowing where you’re going. Don’t be one of those people who solely depend on luck and glittering magic to make their fortunes.
Goals have an action plan that makes dreams into reality while making a million dollars will seem impossible at first but if you create a strategic plan and execute it properly, you can make a million dollars, don’t believe me?
Take any millionaire’s story and read up on it! They all had financial goals and a plan to fulfil those goals.
Today I’m sharing 7 such goals that I feel are super important for the next 10 years.
Let’s get started!
7 Financial Goals To Set For The Next 10 Years
1. Getting out of Debt (Forever)
Have you ended things with Debt on good terms? Wait, you’re still with Debt! Why would you do that!
Before you think of any other financial goals for your future, you need to end your relationship with debt. Debt has given you enough burden, you need to let it go.
The two best ways to tackle debt the smart way is Debt Snowball and Debt Avalanche. I won’t be explaining these terms here as I’ve already explained it in various other posts and I’ve written a detailed article on it, you can read it here – Debt Snowball Vs Debt Avalanche.
If you have a home loan, you’re probably in debt for at least 10 years if not more, to finish off this loan in 10 years or less, you will need to get all intake help from a financial advisor on how you can fight debt and pay it off in 10 years.
Sage Tip: Don’t use Debt Consolidation method to get rid of debt. You will end up increasing your loan duration and paying more in interest! Here’s an article where I’ve explained why debt consolidation isn’t the right way to get out of debt.
Be it a car loan, college loan, personal loan, home loan or any other loan, chalk out a plan on how you’re going to get rid of all debt, don’t spend on luxuries till you end it with debt, once and for all!
2. Buying a House
It’s a dream to buy a house, isn’t it! But like every dream we have is a fantasy, owning your own house may also just be a fantasy. Don’t let that happen to you.
I know Robert Kiyosaki and many others have said, House is a liability, not an asset; but most people including me still want our own house.
If you’re currently staying on rent, that’s okay! But if owning a house is one of your financial goals, I suggest you do something about it.
Start by checking out the type of house you want, do you want an apartment, a bungalow or something else. Then see the average cost of such houses in various neighbourhoods and choose the one you’re comfortable with.
Note: If you’ve already purchased your house, that’s great! Congratulations! If it’s on a mortgage, refer to point 1 and pay the entire loan amount, if not skip this point and read the 3rd point.
If you’ve read my article on Renting vs Buying, you know that the calculations mostly prefer Renting a house over Buying a house.
And while that’s the case with most houses, buying your house has an emotional connection attached to it and that’s why you must have an effective strategy in place so that in the next 10 years you are financially prepared to buy a house and still not go broke.
You need to save money for a down payment (20-30% of property value) and all additional expenses that go with buying a house, the rest can be in the form of a loan (I know point 1 says get rid of debt completely, but if buying a house is one of your financial goals, doing it without a loan will be very difficult, take a loan and try repaying it in 5-10 years).
3. Building a Strong Emergency Fund
Knock Knock; Who’s there? It’s Emergencies destroying your finances all at once. This emergency at least knocks on your doors, but most emergencies, break the door open and give you a huge shock.
You don’t want that, all you want is a normal life with little to no hurdles. Do you know – 1 in 4 Americans don’t have proper savings and an emergency fund in place. They live on the edge hoping nothing goes wrong!
That’s why having an emergency fund can be the best thing you can do for your family and of course ‘you’. Your emergency fund will protect you from job loss or a large medical expenses, you have a well-funded reserve for all your problems.
Usually, I would suggest you maintain 6 months of your expenses stocked up in your emergency fund, but this is a financial plan for 10 years right! So it’s fair if we have at least 1 year of expenses instead of 6 months.
Store this money in a good savings account, make sure it’s highly liquid (you should be able to withdraw this amount immediately if needed).
An emergency fund should be your second-highest priority, the first should be to save what you earn.
4. Creating a Retirement Account
This is a non-negotiable financial goal. Even if you think you don’t want to start saving for retirement, you have to. Yes, that’s right, a retirement account is the most important investment you’re ever going to do.
Millennials today are extremely determined to get rich so that they could retire early, are you like them? If not, make another savings account – this is solely for your retirement.
Don’t ever withdraw money from this account (unless your emergency is way bigger than your emergency fund balance) and keep adding some money from your income to this account.
Don’t go aggressive with putting money in this account hoping to retire soon. You need to invest your money, put it in an emergency fund, spend on essentials and keep some in the bank for causal expenses.
Even if you love your day job, you must plan your retirement early on.
Sage Tip: The best way to retire early is by starting today. Put some money every month for this. The earlier you start, the earlier you’ll retire.
By planning your retirement journey starting today, you’re putting yourself in a great position to save.
You will have a larger portfolio early on, that means you don’t have to worry about savings and retirement when life gets complicated and you’re always on the run.
5. Multiple Streams of Income
The best way to solve 80% of your financial problem and almost all of your financial goals – Double your Income. Doing this from your day job will be difficult unless you can give your boss a hard time and force him/her to double your Annual Salary.
The next best alternative is to create another source of income. Your sole focus with this additional source of income should be to replace your salary.
If you make Rs 50,000 a month, then try making at least Rs 50,000 with your new source of income.
Here are a few articles to help you create an additional source of income –
By doubling your income, you’ve boosted your retirement fund savings by 100%, you can use this money to pay off debt faster, you’ll have more money to spend, more money to invest and more money for emergencies!
Why won’t you like to have all this! Read the above article asap, choose the best ones you like, then start hustling till you don’t make money.
Note: It may take you at least 6 months to make money, don’t give up and keep trying and learning new strategies on how you can make money.
6. Insurance and Drinking Water go Hand in Hand
Having a well-funded insurance policy can give you a good night sleep, it readily can. When it comes to insurance policies, there are two types of insurance policies every person in your family should have
- Life insurance
- Health insurance
There’s a third one too – Auto insurance but that’s only if you have a vehicle.
Stick to term life insurance, it’s the cheapest one of the lot, you pay less premium and you get pretty good insurance.
When buying health insurance, make sure you get your tax deductions under 80D (applicable only in India – please check your tax deductions for a health insurance premium).
I would recommend you take a family floater policy, but that’s up for debate as both have an individual policy and family floater policy have their pros and cons. Here’s an article on Health Insurance policy.
When it comes to taking insurance, it’s all about finding the right balance. Many take too much, pay too much premium and then insurance turns into a financial burden for them.
Some take too little and that won’t help anyone, right! Take some time and find the right balance which you are comfortable with and buy an insurance policy.
7. End Any Addictions That You May Have
This isn’t a financial goal as such, but it will affect your financial goals in a big way. I won’t name any addictions here but if you do it, you know it! These can be a big block in accomplishing your financial goals.
You also need to pay for the stuff you buy, so that’s directly money off your wallets. During a financial crisis, instead of finding a solution and solving the problem, you’ll sit in a corner and start doing stuff that just increases the problem.
It also wastes a lot of time that could have been used to make money or do something productive.
Stop doing this and start living a life that you and others around you cherish.
If you want to have addictions, have good ones like addicted to work hard, addicted to making money, save money, addicted to helping the poor and needy, addicted to teaching and educating people about personal finance or English or whatever it is you major in.
You see addictions are good if your intentions are good. Don’t eliminate addictions, shift your addictions from the bad ones to the good ones.
Financial Goals – Is it Necessary?
Creating financial abundance and achieving financial independence has nothing to do with luck. It all depends on how you approach a given situation and tackle it to get what you want.
Writing down your Financial Goals, help you to think better, and plan for the road ahead. Doing this, you don’t let others plan your path, instead, you plan your path yourself thus having full control over it.
Once you write down your goal and work towards them for a few days, it becomes a habit. Now you’re ready for financial independence.
All you need to give is time and consistency. It may seem far away, but the more you repeat doing what’s in your financial goals, the more you get closer to it, and finally, you’ll achieve it.
One condition though – You Need To Make It Happen. Not your mom or dad, not your girlfriend or boyfriend, not your funny uncle James, It’s you who can shape your Future.
When was the last time you wrote your goals? And when was the last time you revisited them and made changes? Let me know in the comments!
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