Smart Money Goals Part 1: Five Steps You Can Take Right Now

The journey to financial well-being begins with setting clear, attainable goals. These objectives will not only provide a roadmap for financial success but are also the building blocks for future stability. This two-part post covering short- and long-term financial goals begins with five actions that will set you up for financial success in the new year and beyond.

• Emergency Fund: Build or Replenish

Establishing or replacing an emergency fund is a crucial short-term goal. Aim to save enough to cover three to six months’ worth of living expenses. Consider housing, utilities, transportation, insurance and medical costs, among others. This fund serves as a safety net for unexpected expenses or sudden changes in your circumstances.

• Pay Off High-Interest Debt

Prioritize paying off credit card balances or personal loans. Reducing or eliminating debt not only improves your financial health but also frees up money that can be redirected towards other goals.

• Create a Monthly Budget

Develop a detailed monthly budget that accounts for all your income and expenses. Consider fixed expenses such as rent or mortgage payments, as well as variable expenses, such as grocery and food costs.

• Save for a Specific Purchase

Identify a short-term objective to save for, such as a vacation or a new electronic device. Working toward and achieving smaller goals can prove a sense of accomplishment and help you practice disciplined financial habits that lay the groundwork for greater aspirations, such as purchasing a house.

• Establish a Retirement Savings Habit

If you haven’t already, start contributing to a retirement savings accounts, such as a 401(k) or an Individual Retirement Account (IRA). While retirement is a long-term goal, initiating the habit of regular contributions is a crucial short-term step toward securing your financial future.

Remember that the key to achieving goals is setting realistic targets and tracking your progress, recalibrating as needed. For setting long-term financial goals, check out Smart Money Goals Part II.