Article | Foundr MAGAZINE
Your Path to Financial Freedom: 10 Goals You Need for 2023!
Some people make New Year’s resolutions, but it’s crucial to revisit your goals consistently. Studies reveal that 91% of people fail their resolutions every year. That’s why I review my goals every 90 days, especially when it comes to financial goals. Since financial goals demand regular investments of money and effort over time, having a solid plan is essential. Start by setting financial goals. If you’ve never considered this, here are 10 crucial financial goals for everyone to prioritize in 2023.
What Are Financial Goals?
Financial goals are objectives set by individuals or businesses for their long-term and short-term financial success. These goals can include saving for retirement, paying off debt, building an emergency fund, increasing net worth, investing in the stock market, owning a home, and more. The specific financial goals vary from person to person based on income level, existing debts or assets, life stage, and financial priorities. Achieving financial goals is crucial for gaining financial freedom and stability.
1. Build a Robust Emergency Fund
While we often think of the emergency fund as a short-term goal, it offers significant long-term benefits. A well-stocked emergency fund can:
Eliminate money worries by ensuring you always have a financial cushion.
Provide a safety net in case of sudden emergencies, such as job loss or medical expenses.
Serve as a money management tool, helping you save for other financial goals.
Offer an intermediate funding source between your paycheck and long-term investments.
Make market volatility more manageable, reducing emotional stress during market downturns.
Given these advantages, consider elevating your emergency fund’s priority. Explore the top savings account options for your emergency fund, focusing on safety and accessibility.
2. Become Debt-Free
The great thing about this goal is that anyone can do it, regardless of income or wealth level. If you want to make the most of your finances, getting out of debt is practically a requirement. Whether it’s good or bad debt, eliminating it is essential. Here’s why:
Being debt-free gives you full control over your income.
It frees up money for savings, investments, and spending.
Removing debt allows you to quit a job you don’t enjoy.
It relieves the worry and stress that come with debt.
Getting out of debt is attainable, even if you have high-interest credit card debt. Consider taking advantage of a 0% APR balance transfer offer to consolidate your debt and save money. Options like the Chase Slate® card offer a 0% APR for 15 months with no balance transfer fee, helping you save hundreds or even thousands of dollars during the introductory period.
3. Plan for Early Retirement
Planning for early retirement is a goal worth pursuing. Regardless of whether you love your job, having the option to retire early is essential. Planning for early retirement is crucial for several reasons:
It ensures you have time to adjust if you encounter setbacks on the path to retirement.
Poor health might necessitate early retirement, and preparation is key.
Family circumstances may require more of your time, and early retirement provides that flexibility.
You might decide to work less or transition into part-time work.
Early retirement planning offers one more advantage: by front-loading your retirement investments, you’ll have a larger portfolio earlier in life, reducing the pressure to save for retirement later.
4. Create Multiple Income Streams
Even if you love your job, creating multiple income streams serves as income insurance and belongs on your list of financial goals. Here’s why:
Additional income streams can enable you to semi-retire at an early age.
They provide an option for starting your own business without quitting your job.
Extra income can be used to bolster your retirement savings or pay off debts.
Several income streams create an income portfolio, reducing reliance on a single source of income.
Creating multiple income streams can be a rewarding journey, as it provides financial security and opens doors to various opportunities. Consider pursuing passive income, side businesses, or investments to diversify your income sources.
5. Adequate and Well-Balanced Insurance
Balancing insurance coverage is a vital yet challenging financial goal. It’s crucial to have enough coverage without overpaying. Here are strategies for striking the right balance:
Opt for cost-effective term life insurance to match your specific needs.
Carry the lowest level of auto insurance allowed by state law, particularly if you have a safe driving record.
Select a high deductible on health insurance and build an emergency fund to cover the deductible.
Work with a knowledgeable insurance agent to ensure your coverage remains balanced. Adequate insurance coverage offers peace of mind and financial protection for you and your loved ones.
6. Live Below Your Means – Always
Learning to live on less than you earn is a fundamental financial goal. By doing so, you’ll have more income available for saving, investing, and paying off debt. Prioritize increasing your income while maintaining a lifestyle that allows you to live within your means.
7. Overcome Materialism
While not a financial goal on its own, overcoming materialism is essential to achieving all your financial goals. An obsession with material possessions can hinder financial progress. Excess stuff leads to storage issues, ties up capital, and diverts resources from productive investments.
Overcoming materialism will simplify your life and make it more purposeful. Prioritize experiences and meaningful relationships over accumulating possessions. Ending your addiction to stuff can be a liberating financial goal with long-lasting benefits.
8. Pursue Work You Love
The ultimate purpose of improving your finances is to gain independence in your life, allowing you to do what you love. Ensure your job aligns with your values and provides personal satisfaction. Achieving financial goals like eliminating debt, creating multiple income streams, and living within your means can pave the way for you to pursue work that fulfills you.
9. Embrace Generosity
Comfortably sharing your good fortune with those less fortunate is a sign of financial maturity. Generosity should be an integral part of your financial journey. Giving not only affirms your power over money but also makes you part of positive change in the world. The act of giving can be deeply rewarding and lead to unexpected benefits.
10. Leave a Financial Legacy
Leaving your loved ones in a better finan cial position after your passing is an essential financial goal. Ensure you have adequate life insurance to provide for your dependents, pay off any debts, and cover estate taxes if applicable. Discuss the financial implications of your death with your family to ensure they understand your wishes and concerns.
Moreover, set an example of sound finan cial management, as what your loved ones learn from you can benefit them throughout their lives.
Reaching financial independence requires setting and achieving good financi al goals. By making your goals specific, measurable, attainable, relevant, and time-bound (SMART goals), you can create a roadmap to attain your financial aspirations. Whether you aim to save for an emergency fund, pay off debt, build an investment portfolio, or pursue other financial objectives, SMART goals will keep you motivated and on the path to success.
Why Are Financial Goals Important?
Financial goals are vital because they provide direction and purpose. By setting these goals, you create a plan for the future, guiding how you manage your resources and seize financial opportunities. They help you make informed decisions about where your money goes, ensure you stay motivated, and measure your progress as you work toward a more secure financial future.
What Are Some Examples of Good Financial Goals?
While financial goals may vary depending on individual circumstances, here are some examples:
Saving for an Emergency Fund: To weather finan cial storms and unexpected expenses.
Paying off Debt: Reducing or eliminating debt to improve financial health.
Saving for a Down Payment on a Home: Working toward homeownership.
Saving for Retirement: Building a strong retirement savings plan.
Saving for Children’s Education: Providing for your children’s educational needs.
Building an Investment Portfolio: Growing your wealth over time.
Creating a Budget: Managing your spending and increasing savings.
Overcoming Materialism: Simplifying your life by reducing the desire for material possessions.
Pursuing Work You Love: Finding a fulfilling career.
Embracing Generosity: Sharing your good fortune with others.
Leaving a Financi al Legacy: Ensuring your loved ones are financially secure.
These examples are the foundation for your financial journey, but it’s important to frame them as SMART goals to increase the likelihood of success.