You are reading Week 49 of 52 Weeks to Eliminate Debt & Curb Spending. Please read the overview here to learn more about the series & get your FREE financial planner. If you just joined us, please start with week 1.
The end of the year is almost upon us. It is time to really start making plans for the future. This week take the time to Set Long Term Financial Goals. You have navigated through this year focused on the immediate needs of getting rid of debt, but you also need to look at what your long term needs will be. We have pulled together a list of things to consider when making your long term financial goals.
1. Savings for future emergency needs. We all have various needs that can crop up from time to time that don’t fit into our immediate budgets. One important long term goal is to build a savings account that will be available for future emergency needs. This can pay for things like car repairs, medical expenses or new appliances in your home.
Work in baby steps, so you stay on track and don’t get frustrated. Start with a goal of having $500 in your savings account. Then move to $1000. Once you have hit that milestone, strive to have one month of expenses in your savings account. Look at your budget. How much money do you need each month to day bills, put food on the table and pay for incidentals?
The end goal is to have 3 months – 6 months of living expenses saved. This is your fully funded emergency fund.
If you are still paying off debt, start with having an emergency fund of $1000. You need to determine the amount best for your situation, but having enough money in the bank to pay for an emergency without incurring further debt is key.
2. Sufficient retirement savings for yourself and your spouse. This is one of the most important long term goals you will have. As we have mentioned many times this year, social security benefits are not typically enough for anyone to live off of. Focus on providing yourself with a solid income for the rest of your life. As you plan for this retirement fund, keep in mind that inflation and fluctuations in the economy can play into what is needed later on, so always plan for more.
Once you’re out of debt and have built up your emergency fund, it will be time to move on to this next phase of saving.
Sufficient college funds for your children. If you have children you will likely want them to have the best opportunities for education. Planning ahead and saving for their college education is a choice that many will need to make. While you hope your child will receive scholarships, not every one does. Having a fund available to care for their education needs is very important for both their happiness and success, but their individual financial futures.
Remember that your child’s education is important; however, your financial future is more important. Don’t start funding an account for college expenses until you have your own savings and retirement funds in good standing.
These along with many other long term financial goals are things you should begin considering as you work down your debt and make more room for savings in your budget.
Week 49 Challenge:
Where are you in your journey? If you’ve crawled your way out of debt, start with fully funding your emergency fund then move onto retirement savings. If you still have debt, continue working toward your goal of being debt free, but remember your long-term goals of financial success.
- When should I start savings for retirement by CNN Money.
- 10 ways to prepare for retirement by US Department of Labor.
- An interesting look at paying for college in thirds by Time.com.
Disclosure: I am not a financial adviser nor do I have formal financial training. All articles are for informational purposes only and should not be interpreted as financial advice or consultation. Please consult your account and/or financial adviser before making changes to your finances. All situations are different, so please consult a professional to determine your individual needs.