Financial Health Part 3: Set Financial Goals


May 25, 2017

By now, you should be on the right track to a healthy financial life. Part one in our series advised you on how to detox your budget, while part two explained how to get your credit in shape. Now, in part three, we’re moving on to proactive financial health by setting financial goals.

What are financial goals? They are both short-term and long-term objectives that require good money management to achieve.

Achieving most financial goals is like running a marathon. It takes a long time and persistence to get where you want to go. All the more reason to start today!

Here’s a list of financial goals you should be planning for, along with tips on how to reach them.

A Financial 5k: Short-term Financial Goals

If you’re just starting to get used to a financially fit life, begin by taking on a short-term goal. Once you complete it, you’ll have more confidence in achieving some of the more advanced goals in this list.

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  1. Eliminate Debt

This could be the smartest thing you do for your financial health in the short term, because paying interest is like wasting money.

  1. Plan for That Dream Vacation

Perhaps you’ve always wanted to go to Ireland, or maybe you imagine yourself traipsing through Alaska. That dream vacation is attainable with the right planning.

  1. Grow Your Emergency Fund

You’ve probably heard you should have at least three months’ worth of expenses put away in case of an emergency. That’s a conservative estimate.

  • Set up a separate account for emergencies. Our Personal Savings Shares earn you dividends on all balances and you can easily transfer money into the account.
  • If possible, set up an auto transfer to move a small amount of money every month to your emergency fund until you reach a comfortable level.
  1. Create a Will

This may not be on your radar as a financial goal, but if you don’t have a will in place, your money may not go where you want it to. It takes just a couple of hours to do, and it will give your family financial security in the long term.

  • Consult family and friends to find a reliable lawyer.
  • Make decisions ahead of time about who you want to be your executor, for instance, and who you want to give your assets to if something were to happen to you.
  1. Save for a New (or “New-to-You”) Vehicle

Depending on the vehicle you want, this may be a long-term goal. Since we don’t typically know when our car will take its last trip, it’s important to begin saving for a vehicle before you need one.

  • Set up automatic transfers to a “New-to-You Car” savings account. If you have multiple shares in your PSECU account, you can name each one to help keep yourself organized.
  • For a short-term investment option, considering opening a Certificate.

A Money Marathon: Long-term Financial Goals

  1. Save for a House

This could also be a short-term goal depending on how much you plan on spending. There are many first-time homeowner mortgages you can qualify for to bring down the initial cost of a loan, and the sooner you stop throwing money away on rent, the better off your finances will be.

  • Consider soliciting gifts from your family to finance the down payment. This is allowable under some mortgage plans.
  • Forego small extras like your daily specialty coffee or monthly pedicure to put toward home savings instead.
  1. Save for Retirement

You should be saving for retirement not at age 40 or 50, but from the moment you take your first job. Save with a purpose – figure out how much you need for a comfortable retirement and work hard to put that money away, even if it means more penny-pinching in the moment. How to do it:

  • Take advantage of any company-matched 401(k) retirement plans.
  • Talk with a trusted financial advisor about the best options for you.

Check out step 5 in this money management plan to see just how much more money you could get when you invest in a tax-deferred, contribution-matched, employer-provided retirement account.

  1. Save for Your Child’s Higher Education

Some parents assume they can’t pay for college and don’t see the point in saving for it. But there are many programs that can help you save and maximize the dollars you put away, putting a significant dent in the loans your kids will need.

  • Start as soon as you begin considering having kids. Ask relatives to donate to your child’s education fund as a gift.
  • Talk with a trusted financial advisor about the best investment options for you.

Revisit Your Financial Goals Regularly

Setting the right financial goals should be part of your long-term planning. People change, and you may find that the motorcycle you once pined for has taken a back seat to some home renovations. Don’t be afraid of changing your savings goals to match your desires.

Set a certain day each year, such as Tax Day or New Year’s Day, to revisit the prior year’s goals and see if they’re still the same for you and your family.

Look Forward to Your Financial Future

If you follow these tips, you can achieve your financial goals without driving yourself nuts or struggling to stay on track. Focus on the rewards you will reap when you handle your money responsibly.

Find more money management tips and resources on our WalletWorks page or click on the button below to continue reading this series.

FINANCIAL HEALTH PART 4: Establish Your Financial Fitness Routine.

The content provided in this publication is for informational purposes only. Nothing stated is to be construed as financial or legal advice. PSECU does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs or websites. PSECU does not warrant any advice provided by third parties. PSECU does not guarantee the accuracy or completeness of the information provided by third parties. PSECU recommends that you seek the advice of a qualified financial, tax, legal or other professional if you have questions.