Find clarity with these finance goals and work towards them.
Determine a direction to put your effort into and achieve your goals.
Become financially free to create the life you want.
1. Pay off consumer debt
High interest debt is a waste of money. Credit card debt or consumer loans to pay something you couldn’t afford in the first place is a strain for your budget and savings.
Make a plan to reimburse all those high interest debts to find more freedom in your budget.
In addition, build a habit to not create new consumer debt.
If you have credit cards, be on top of your game when it comes to paying the bills on time.
But it’s also about not buying an item you can’t afford. This is a case by case decision of course, but you rarely need the newest most expensive model of a product.
Maybe focus on your needs more than your wants for a while as you make your way through these financial goals.
2. Build an emergency fund
An emergency fund is just a safety net to avoid consumer debt. No need to take a loan to prepare your car if you can use your emergency fund.
Forget about this money unless it’s an emergency. Don’t use it for fun or pleasure.
The amount will vary from people to people. A good place to start is to save $1000.
However, some people like to save more, especially if their first source of income fluctuates or is uncertain.
In this situation, you might want to save 3-6 months of expenses, some people go as high as saving for a year of expenses.
Not everyone needs to save as much as that, then comes into play the cost of opportunity, as you’re not investing the money you’re saving for a rainy day.
3. Create a passive source of income
A steady source of passive is a great financial goal as it detaches you from the need to work for money. Income generates itself after an initial investment.
It gives you freedom and opportunity to go after what you really want.
Invest in stocks
I don’t want to tell which stocks to invest in, this can be risky. But there are stocks that are somewhat safe to get started with.
Investing in stocks has two advantages for your finances.
- Stock value increases overtime
- Dividends are a source of passive income
Your invested money grows with time and no effort on your part. And it generates quarterly income.
You need to build a big enough portfolio before seeing any real dividend money coming your way, but it’s definitely worth the wait.
Rent a room, flat, house
This is my favourite financial goal and the one I’m working towards.
There is a high barrier to entry to become a landlord as you need to own a property.
It also depends on where you live, some cities real estate markets are insane.
But, if you can manage to purchase a property and rent it for more than the monthly expenses (mortgage, insurance, property management, taxes, etc.) then it’s an incredible passive income.
4. Have salary goals
Today you might be earning $30,000 a year. Your next goal might be $35-50k. Afterwards, you can aim for $75k, and $100k and so on.
Don’t accept your salary as something final and unchangeable.
You can have an impact on your annual income to increase it. Even if you are an employee, your salary progression is as much in your hands as it is in your employer’s hands.
You have 3 options to increase your annual salary:
- Stay in your company and get paid more. You can learn new skills to make you more valuable, ask for more responsibilities, fix objectives with your manager and achieve them with flying colours.
- Change jobs and get a pay increase in the process. Experience from another company is often valuable, but you can also develop your skills and have a different position that pays more.
- Find additional sources of income. Get a second job or start a side hustle.
Create your own finance goals, take a piece of paper and write the next 5 salaries you want to work towards, and then cross them as you go.
Beware of your lifestyle inflation, don’t let your expenses grow proportionally to your income. Instead, try to earn more money while keeping the same level of expenses to invest the difference.
Check out this post on how to save more of your income every month.
