The Best Financial Goals for Your Financial Freedom
In order to achieve total financial freedom and independence, there are a couple of financial goals that you will need to set yourself to accomplish. Financial freedom is fully reachable for anyone who determines in their heart to get there, and it is wise to set goals for yourself to have a sense of success along the journey of getting there.
In this article, we are going to look at a couple of financial goals that you should set for yourself to work your way to financial freedom. Hopefully, by focusing on these goals, you will be able to get out of debt and develop multigenerational wealth.
General Information about Financial Goals
Goals are important because they remind us of small successes along the way in a much broader journey. Achieving financial goals is even sweeter than most other kinds of achievement because we find that life becomes increasingly easier and more enjoyable as we pass each respective milestone.
However, the problem with success is that every success worth having requires some type of pain. Financial success is no different. Still, if you will submit yourself to the aim of completing the six financial goals below, you will find that the success is worth every bit of the pain.
6 Goals for Your Financial Freedom
Goal 1: Get Out of Debt
The main problem with debt is that it’s incredibly costly. Often, people will ask me if they should begin investing while they have debt. Absolutely not! The interest that you pay on most forms of debt is far higher than any interest that you should hope to make by purchasing stocks or bonds.
Most credit cards charge between 15-30% in interest on outstanding balances, and New York University did a great study showing that the stock market has only averaged roughly 11% over the past 90 years.
Getting out of debt should be your number one priority.
Goal 2: Put Aside $1,000 for Emergencies
Now that you’re out of debt, your newest top priority goal should be to never return to it. But life comes with unexpected events, and sometimes we get financially broadsided by some expense that we never saw coming. That is why the next step in this process is to put aside $1,000 into a savings fund to be usable at a moment’s notice in the case of catastrophe instead of turning to those horrible, old credit cards.
Personally, I recommend keeping this money in a high-interest online savings account or with a credit union, as they often pay better interest on savings accounts than traditional banks.
Goal 3: Put Aside 3-6 Months Income for True Protection
Sure, that $1,000 might save you if your car breaks down or you need to get a medical test taken care of. But what about when you lose your job? Hope for the best, but plan for the worst, and in the event that you lose your job, you need to be prepared so that you don’t have to go back into debt.
That’s why, even though it is against most people’s financial instincts, the next most important step is to set aside 3-6 month’s income as an emergency fund in case of the worst.
Goal 4: Start Investing
Now that you are fully protected in the event of hardship, the next step is to start building an army of workers that work for you 24/7/365. You can do this by putting your money to work with investments.
These days, you don’t have to be super smart to get started with investing. Simply find a good robo-advisor that you like and begin putting away a few dollars each week. Even if it’s only $10 a week, the compounding value of time will allow that money to grow at an incredible rate over twenty years or more.
Goal 5: Prepare for Retirement
The next goal to aim for is to max out your retirement accounts as much as possible. For a 401(k), the annual limit is currently $18,000. If you are over age 50, then you are allowed to contribute up to $24,000. Alternatively, look into maxing out an Individual Retirement Account (IRA). The annual limit is currently $5,500 unless if you are 50+ in which case it is $6,500.
In order to take full advantage of your retirement years, you should aim to max out your annual contribution to these types of accounts as soon as possible. This is one of the most critical components of achieving your financial goals.
Goal 6: Become an Abundant Giver
At the end of the day, everything around us passes away. The house, the car, the land–everything goes the way of the world. The only thing that has any real, lasting value is the way that we treat each other attempt to help people around us. As a result, the most important of the financial goals is to create a plan that allows your newfound army of dollar workers to go to work for others over an extended period of time.
If your money is to mean anything, it must help someone else. Since this is the ultimate goal, this is also the most important step.
Drawing to a Close
As you can see, each of the financial goals in this article is a sort of stepping stone. The second goal builds on the first, the third goal builds upon the second, and so on. Make no mistake: it is not easy to achieve any of these goals. However, by creating a budget, sticking to it, and acquiring the help of a couple of advisors that you trust, it is highly possible (even probable) to achieve that sweet success that so many yearn for.
By following these goals, you will be able to obtain financial freedom for yourself and your family. Also, it is possible that you will even be able to help others achieve their own freedom if you start working on it soon enough!