Living in New York isn’t cheap! Whether you have a high-paying job, you’re working your way up the corporate ladder, or you’re hustling to get a startup off the ground, having solid financial goals can be hugely beneficial to you now and later in life.
Of course, when you ask most people about their financial goals, they’ll usually say something like, “I just want to make enough to live comfortably,” or, “I want to retire early.” But what does that mean? And how do they plan on getting there? That’s where good financial planning comes in. If you’re trying to save more and meet your goals, you need to get specific, and you need to know a few things about setting financial goals.
You Need Short-Term and Long-Term Goals
When setting financial goals, you can’t think solely about the short-term, but you also can’t think only of the long-term, either. You need to have a range of goals from financial goals that you want to meet next week or next month to goals that you want to meet when you’re 70 (and everything in between).
Basically, when you look at your goals, they should look something like this:
- Having enough cash saved to take care of 3-5 months of living expenses.
- Completely paying off student loans, credit card debt, and other debts.
- Saving for larger purchases, like a vacation, a new car, or new furniture.
- Saving for the down payment on a house or condo.
- Saving for retirement.
This list is, of course, not comprehensive, but it’s a good bare-bones sketch of what your short-, medium-, and long-term goals should look like.
You Need to Know What It’s Going to Cost
How much do you owe on your student loans? How much is that vacation going to cost? How much will you need to live comfortably after you retire? Once you know these figures, you’ll know how much you need to save to achieve them, which brings us to the next thing you need to know…
You Need to Know How Much of Your Monthly Income Should Go to Your Goals
Take the figures you have for your goals and look at them on a few different timelines. If you put $200 per month toward your retirement fund, how many months will you have to work to achieve your goal? Understanding that timeline will help you understand when you can retire and what you need to do to retire sooner. The same goes for short-term goals, as well. When you have a solid figure for how much that new car will cost you, you’ll know how much you need to put away each month if you want to buy it within the next six months, year, two years, etc.
Good Prioritization Is a Must
Setting these goals is a great first step, but it’s only the first step. If you want to actually achieve them, you’ll need to prioritize your spending. For example, while you might prefer to call a car to get to work every morning, riding the train is much less expensive and will help you save money to achieve your goals. You may want to go on that vacation, but if your car is in bad shape, you should probably prioritize getting a new one first.
These are the basics of setting financial goals and creating a budget that goes beyond, “Can I make rent next month?” With these building blocks, you can start to transform your spending habits and get a good, concrete idea of what you need to do to achieve financial success. Good luck!