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It’s good to have goals in life. That’s especially true in your financial life. Setting financial goals can give you a sense of direction and help you build wealth. A goal can help guide your everyday financial decisions.
What are financial goals? They’re big-picture targets that set you up for future financial success. Your financial goal might be to pay off your student debt. Or maybe you’d like to become a homeowner. Working towards these financial goals can improve your lifestyle by reducing stress. When you have a goal roadmap set, you’ll know the next steps you need to take.
Before you set a goal, look at your life and decide where your priorities should be. Do a thorough inventory of your finances. What is your current income? Your tax situation? What’s your budget and your net worth?
Understanding all four of these factors will help you set a realistic goal for yourself. It can be scary to take a good hard look at your debt, income and expenses, but this first step can set you up to achieve what could be your very first financial goal: creating a budget.
Once you have a budget, you’ll know how much money you can set aside for each month. It doesn’t have to be much. DCU savings accounts can be started with 5 dollars or less. Evaluating your financial situation can open your eyes to your financial strengths and weaknesses. Maybe you haven’t been tracking your money. Maybe you’ve been living beyond your means. As intimidating as financial weaknesses might be, it’s empowering to face them. Starting a trackable high-yield savings account with DCU is a great way to start taking control.
Now that you’ve taken a good, hard look at your accounts and expenses, you can start deciding on your financial priorities. There are three types of financial goals with different time spans. A short-term goal can be accomplished within a year. A mid-term goal might take one to five years to achieve. And finally, a long-term goal will take anywhere from 5 years to a few decades to complete.
Setting a budget is a good example of a short-term goal that will help you move on to the next financial step. Another popular short-term goal? Create an emergency fund. Covering three to six months of expenses, these accounts are typically set up in a high-yield savings account. The funds accrue interest as you add to them. This way, the next time there’s trouble on the horizon, you’ll be able to avoid debt while hardly feeling the financial bump in the road.
Long-term goals like paying off debt, saving for a house, or saving for retirement might call for a financial plan including popular investment strategies such as a 401K or CDs.
When it comes to goal setting, financial or otherwise, the concepts are the same across the board. The SMART goal acronym applies every time! Goals need to be:
A long-term goal like saving for retirement or paying down your school debt might seem like an impossible task, but by setting mini-goals and recognizing milestones, that whale gets smaller every month.
Setting a timeline for something like saving for a house can make it seem less intimidating. For instance, maybe you create your budget in the next two weeks. Next, reward yourself for following it by setting up a savings account. If you want more help deciding on your next steps and timeline, check out our Balance Program. Providing financial wellness education, it has the resources to help you confidently plan.
Where do you see yourself in the future? Are you sitting on your back porch, looking over your yard while drinking a cup of coffee? Maybe you’re retired and walking the beach with your dog. No matter what your dreams are made of, it’s important to start investing now to pay for them.
Why is it important to invest? Investing puts your money to work. The more money you have invested, the more your money will grow. Suitable investment options depend on your needs.
If you’re having trouble making investment decisions, you’re certainly not alone. Feel free to contact the professionals at DCU for help getting started.
Any goal is something you have to monitor and track over the course of time. Financial goals are no different, except that tracking your financial goal progress might be a little easier. Reviewing your spending and saving is easy with banking apps.
If you want to better understand how much you’re putting away, DCU offers a savings calculator to help you figure out how much you’re actually saving each month when taking your dividends into account. It’s always rewarding to see your progress!
Say you’re a month into your financial goal journey. You’ve set the budget. You’ve started to put away money. And then it hits you. Your car needs repairs. You go out for a friend’s birthday and let loose. It happens! Here are a few tips for getting back on track:
Setting financial goals is a great way to set yourself up for financial success and security. From paying off debt to saving for retirement, your financial health will never suffer from moving toward a goal. Whether you’re starting from stage one and setting up a budget or you’re getting closer to retirement, know that DCU can help you set up and take action on your financial goals!
Please note, membership is required to open a DCU Checking or Savings Account. Visit our membership eligibility page for more information.
This article is for informational purposes only. It is not intended to serve as legal, financial, investment or tax advice or indicate that a specific DCU product or service is right for you. For specific advice about your unique circumstances, you may wish to consult a financial professional.