Creating a timeline for financial goals can make even savvy planners feel like Goldilocks. Set your deadlines too far off and you might be tempted to procrastinate. Set a deadline too soon and the goal can feel impossible to achieve.
Start by defining your goals, then build out realistic deadlines, as needed.
First, make a list of all of your goals and then categorize them into needs, wants and wishes:
Next, prioritize your goals in each of the 3 categories (above) to give yourself a schedule to see them through. Here’s a sample goals list to get you started:
Establishing an emergency fund is critical to ensuring your financial plan doesn’t veer off track if/when something unexpected comes up. This type of goal is a need and should be prioritized. Needs-based goals are meant to sustain and protect you.
Ideally your emergency fund has enough to cover three- to six-month’s worth of daily expenses. Determine your overall target, and figure out how much you can allocate each month to help you get there. Then, set up an automatic deposit to a designated savings account. You could even consider opening a money market savings account to take advantage of the higher interest rate compared to a standard savings account.
Achieving this goal may help you be better prepared to pay your bills and other necessities if an unexpected event happens.
Having a lot of high-interest debt can get in the way of your financial goals. The average American under the age of 35 has around $67,000 in debt1 in the form of mortgages, student loans and credit card balances.
Consider developing a debt strategy for the year. For example:
This type of goal is a want. It’s something you would like to achieve and are willing to work for, but you wouldn’t sacrifice your needs to accomplish this goal.
Whether you’re just starting to invest or want to make some changes to your portfolio, it’s important to incorporate an investing strategy into your yearly financial plan. Investing goals can help set you up for the future you want.
Determine how much you can increase your investment contributions by and which accounts those contributions will go to:
As you make progress on the goals you’ve set, you can start to reap the benefits of your financial planning. This is where saving up for something fun, such as a vacation or a new car, can become a great goal to keep you motivated.
To ensure you reach it, you can set up:
Opting for direct deposit to a separate savings account is one good way of making sure you stay on track to reach your goal. Once you’ve started on this goal, you can make it a long-term habit. Just check in regularly to ensure your wish doesn’t interfere with other priorities, like needs and wants.
Even with financial goals in place, developing good money habits can take practice. Check out 6 common money mistakes to avoid when managing your finances.