Today’s post is in collaboration with Rebekah from BlissfulWallet to shed some light on staying on top of your financial goals for 2021.
We all know 2020 has hit us hard in many ways, financially, emotionally and physically. But let’s move forward and think about ways we can work toward the future we want to achieve.
One thing that we want to help you with is holding yourself accountable to your top 2021 financial goals.
Keep reading to learn:
How to define financial goals?
Who benefits from financial planning?
Why are financial goals important?
How you can make your financial goals more successful?
What are some examples of financial goals?
How do you define financial goals? Having this basic definition under your belt can help jump start your personal finance journey.
Financial Goal Definition:
The desire to have something related to the saving, spending, or investing of money.
Financial goals are personal to each and every one of us. Goal setting can go as far as creating a financial plan for age 35 or retirement.
Either way, it’s a financial goal that one sets for oneself depending on where they want to be in life.
You can create short-term, mid-term or long-term goals.
Who benefits from financial planning?
Anyone can benefit from financial planning, it’s a matter of taking control of your finances at the end of the day.
It’s never too late to set yourself up for success, the earlier the better.
Regrets happen when we look back on things we could have done at a certain age. However, by beginning your path to retirement, saving, or learning about investing now will result in the lifestyle that you desire.
Let’s now explore why financial goals are important.
Why are financial goals important?
Financial goals help you to live a well-balanced life.
Determining long term and short-term goals are what make it easier to plan for the future.
When you begin to determine what financial goals, you would like to accomplish, you begin to figure out what goals can lead to your financial stability.
They also place more control in your hands over your finances.
Majority of people feel that learning financial literacy is difficult or impossible for a beginner, but in reality, you simply need to build a solid foundation and a willingness to learn.
Creating financial goals will assist you with building confidence and taking control of your personal finances.
The one thing that truly stands in the way of accomplishing what feels impossible would be the lack of belief in oneself.
How can you make your financial goals useful (successful)?
Make your goals SMART.
I have an entire post you can read on what SMART goals are and other examples you can use to make every goal you have more reachable.
But What is a SMART goal?
Below is an example of a SMART goal. Allow the goal you make to be specific, measurable, attainable, realistic, and timely.
Specific -I want to increase my income by $100 a month
Measurable- I will work an extra 7 hours per month since I get paid $15 an hour.
Attainable - I’ll stay an hour later two times a week and work an extra shift. I do not have any commitments that will prevent me from completing this goal.
Realistic - I will work an extra shift at the end of each month because I can make time.
This is something I can do because I do not have classes during these months and my job will allow me to work extra hours for the summer.
Timely- I will do this from June- to the end of August.
What are some good examples of financial goals?
#1 Make (and stick to) a budget or monthly plan
Over 65% of Americans could not say what they spent the previous month as of 2020.
Once you know where the majority of your money goes, you can determine if you have a problem with how much money you are bringing in or how much you are spending.
#2 Setting a savings goal
The amount you save is just one half of your money saving journey.
The other half of it is determining the reason why you are saving money.
As a young adult usually your highest priority once you decide to go to college or choose a career path would be:
to move out and claim independence
buy a car
start saving for retirement
find a few flashy stocks to consider investing in
write down a few places that you want to travel too.
Having a why motivates you for when you’re tempted to indulge in retail therapy or stay in circumstances that make you unhappy.
#3 Create a high yield savings account
Earn interest while you store your money in a safe location.
I have used CHASE for a while now and after going on a year with my account I officially have earned $0.01.
Yup, one penny.
When it comes to saving online you would want to choose an account that has a minimum you can deposit, no hidden fees, and an interest rate that is suitable.
Bank Rate does an amazing job at breaking down a few different types of high yield savings account you could open today.
#4 Open up a 401K or Roth IRA, or the equivalent in Canada would be a TFSA or RRSP
What age should you start saving for retirement?
They say the best age to open an account is 25. The interest that would accumulate over the years is more the earlier you start.
However, if you’re way past 25, your chance to have a safety net after you hit retirement age is still there.
Once you learn what the best account option is for you, how much you can save annually, and your predicted total savings amount is... you can understand what your path to financial freedom will look like.
Chris Hogan explains the difference between a Roth IRA and 401K and answers a few questions you may have in the process as well.
Your financial goals are a personal journey that you choose to take. If opening a high yield savings account feels important to you then you go for it.
If you want to keep your desire to retire early to yourself so that you don’t have to worry about outside commentary or opinions, that is perfectly acceptable.
There isn’t a right way to set financial goals and you are never too late.
In summary, we hope this post has provided some guidance in starting your 2021 financial goals. You can grow your mind and your wallet one step at a time.
Remember this is just a start, and the most important takeaway is to continue to learn from your mistakes. One last final tip is to review your goals once a month.
Let us know in the comments what some of your financial goals are!
Huge shout out to @BlissfulWallet for helping me create this post and you can find her on Instagram spreading financial knowledge.
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