Financial goals…
You’ve read up on them and you know you should have them. Heck, you might even have some written down somewhere or taped to your refrigerator at home.
But the big question remains… are they the right financial goals?
While our goals should be designed so that they’re individualized for our needs, there just seems to be too much-contradicting information out there when it comes to forming the right financial goals.
With limited attention spans (And endless amounts of finance content), chasing the wrong financial goal(s) can not only derail your progress, but it can impact your finances long term.
This is why I decided to ask 18 of the top money experts what their thoughts were when it came to deciding on the best money goals.
Here is what they had to say…
22 Money Experts Share the Best Financial Goals
- Learn how to set yourself up with the right financial goals once and for all.
- See what these money pros have to say about setting financial goals
No Matter What, Save For Retirement
Michelle Schroeder-Gardner, Seven Figure Blogger at Making Sense of Cents
I think the best money goal a person can have is to save for retirement.”
-Michelle from Making Sense of Cents
Yes, retirement can vary depending on the person, but I recommend saving for it at least in some form so that you can prepare for your future.
Whether you want to retire extremely early or later in life, saving for retirement is 99.9999% of the time a goal that everyone should have. Learning how to invest and save for retirement doesn't have to be hard – everyone has to start somewhere.
Understand Your Baseline
Former Anesthesiologist Who Reached Financial Independence at 39 – Physician on Fire
To reach a particular destination, you not only need to know where you're going but also where you're starting from and how you're going to get there.
The same is true of financial goals. It's great to have a goal in mind, but you also need to know both the steps you'll take to achieve it and where you're starting from.
It may not sound like much of a goal, but you need to establish your baseline. The most important numbers to know are:
- Your current net worth and
- Your annual spending needs.
If you don't have a good idea of both numbers, make it a goal to learn them both. Understanding your current financial status helps you figure out what it will take to achieve a loftier goal like true financial freedom.
Spend Less Than You Make.
Andrew Schrage – Founder & CEO of Money Crashers
One of the best money goals someone should have is to spend less than you make.
It's pretty simple, yet lots of people can't seem to get there. However, there are a variety of budgeting methods to achieve it.
One is to get on a personal budget and make sure that expenses never exceed income on a monthly basis. What's good about that strategy is that you have flexibility.
For example, if you needed to spend an extra $200 on groceries one month because you had a family get together, you can simply cut out $200 worth of spending from your entertainment budget.
As a companion point, adopt the mindset that if you cannot afford to pay off a credit card purchase on time and in full, then you just can't afford it. You should instead save your money until you can.
Additionally, another great money goal to have is to always be mindful of and look for ways to improve your credit score in any way that you can.
The reason why this is a great goal is that a great credit score will have far-reaching positive effects on your overall financial picture, and a bad credit score can hurt you in just as many ways.
How do you reach that financial goal?
Once again, there are plenty of options and strategies. Check your credit report in a timely fashion, look for errors, and get them fixed.
Don't close unused credit cards because that lowers your score. Instead, use those for a few minor purchases each month and be sure to pay off the balance. Set a longer-term goal of getting entirely out of credit card debt, which also boosts your score.
Lastly, be sure to pay your monthly bills on time and in full. Lots of people don't know this, but not doing this affects your credit score.
Do not open up too many new credit cards at once, and be sure to look at the individual spending limits on all credit cards.
Make 5x More Than You Spend.
Jeff Proctor, Co-Founder of Dollar Sprout
In my opinion, the most important “big picture” financial goal that someone should have is to get to a point where their income is significantly higher than their expenses.
How much higher?
I would aim for 3-5x… The higher the better.
If you can get to this point, most other financial problems (ie, debt) tend to solve themselves. There are only two levers you can pull to get to this point:
- Earn more
- Spend less
Reducing expenses will only get you so far, which is why I recommend tackling both sides of the equation.
There are unlimited opportunities out there to increase your income; it’s just a matter of finding the right outlet that combines your skills and passions. For some people, that might mean doing freelance work. For others, it might mean starting their very own business on the side.
I think people tend to underestimate their own ability to earn money. Your salary or wage at your day job is just the starting point – go out there and seize more earning opportunities!
Master Your Cashflow
Douglas Boneparth, Author of Millennial Money Fix & Financial Planner
Boneparth, author of Millennial Money Fix and one of the top financial planners in NYC said it this way when comes to spending:
Master your cash flow.”
Intimately know how money comes in and out of your life — track 12 months of your living expenses by categorizing them. Then, create a budget around your cash flow.
Money is Time.
Kelan & Brittany Kline, Six-Figure Bloggers at The Savvy Couple
Both my answers talk about the same idea of creating more time in your life, not money.
First, focus on increasing your EHR (effective hourly rate).
After reading the book Work Less Make More I became addicted to figuring out how to increase my EHR. Just a year ago I started at around $20/hour with our online business.
Now I am regularly at $200+/hour implementing some of the tactics and strategies from Work Less Make More. Whether you have a regular 9-5 job, own a business, or are a stay at home mom trying to help support the family financially increasing your EHR should be your #1 focus.
The more money you can make in an hour the fewer hours you are forced to work. One of the reasons we are HUGE fans of starting an online business or side hustle.
Secondly, don't get fancy.
Learn to live a happy life on a frugal budget.
One of the biggest mistakes I see people make financially is getting fancy and trying to impress others. Keeping up with the Joneses is a trap.
A trap to purchase things you don't need, go into more debt and become trapped always trying to find the next thing that will bring you temporary happiness.
Material items do not bring you long-term happiness. However, more time to do the things you love and have a passion for does.
Make a commitment to budget your money, live below your means, and find your own freedom in life not dictated by others' opinions of you.
Straight Up, Make More Money.
Mike Yanda – Co-Founder of Laptop Empires
Mike's message is simple…
Straight up… make more money. “
He goes on to elaborate –
“Saving and budgeting are great (and you should totally do that!) but it will only get you so far. If you find a way to make a little side cash you will reach your personal finance goals so much faster.”
He might know a thing or two when it comes to making money. With his online businesses, he was able to make a one-time student loan payment of $135,000.
Invest or Own
Justin Goodbread, Top 100 Financial Planner & Author, Founder of Financially Simple
#1 Be a business owner or investor.”
True wealth comes from tax planning and business owners and investors pay the least amount of taxes.
Secondly, be sure to learn basic accounting. Once the cost of capital, hurdle rates, discounted cash flow, and enterprise value are understood, then true wealth follows…!
Aspire For A Credit Score of 800!
Jim Wang, Founder of Wallet Hacks
It's important to have a good credit score or better, which Experian says is a score that is 700 or above. An excellent credit score, which is one above 800, is something to aspire to but I wouldn't beat yourself up for not having a score that high.
A good credit score makes so many aspects of your life easier.
We all know about credit cards, mortgages, and other loans… but credit scores are used by;
- Landlords to decide who to rent to,
- Cell phone companies to pick who gets a phone,
- And even some employers hire based on credit scores.
Building and maintaining a good credit score is not difficult, you just have to avoid missteps (late payments, missed payments) and wait. If you are patient and a good steward of your credit, it's just a matter of time before your score increases.
Build a ‘Zombie Proof' Emergency Fund
Michael Dinich, Founder of Your Money Geek
First, everyone should build an emergency fund!”
Yeah, yeah I get it, you heard the emergency fund thing a billion times, am I right?
I’m not talking about Dave Ramsey’s wimpy $1500 buck emergency fund. We just had to replace the well-pump at our house, it was way more than 1500 bucks. Luckily, emergency funds to the rescue.
You should build a real, let the zombies come at me bro emergency fund. Once you think you have a fund in place keep adding to it every month.
Secondly, I don't care how much you like your job, it always gets old. I imagine there’s some professional kitten babysitter that’s thinking if I have to deal with one more kitten I’m gonna go postal.
Calculate how much you need to save for retirement and plan to make it happen. Every year check up on your plan and make sure you have saved enough by each age.
I’m going to bend the rules and give you a third goal to work towards.
Related to both of the goals above, set another goal to build up an additional source of income. Having a side hustle will help you pay down debt, save more money, and plan for your retirement.
Plus, if you have a side hustle and your hours get cut at the cat ranch the same time your well-pump decides to call it quits, you won’t have to touch any of that z poc money!
Work Towards Becoming Debt Free
Brian Meiggs, Founder of My Millennial Guide & Meiggs Media
The best money goals many people should keep in mind are becoming debt free and building multiple income streams.”
If you are not already debt free, you should first get a grasp on how much you owe and how you can pay it all back.
You can use free online tools like Mint or Personal Capital to find out the full [debt] amount, and how much you should be saving each month to pay off your debt. Knowing how much you owe is the first step towards becoming debt free.
Next, you'll want to build a budget and recalibrate your life in a way that frees up more cash for debt repayments. Prioritize your most urgent, high-interest debts and then figure out where you can trim your spending to pay these accounts off.
Simple steps like not getting that cup of coffee or just packing a lunch will save you thousands every single year, so leave no stone unturned when looking for ways to save.
As you get your spending and savings in check, you'll want to focus on maximizing your income.
Explore avenues for maximizing your income as a way to pay off your debt. This can be as simple as renting out a spare room, finding side gigs, and other countless ways to make extra money Do some research and see which ones work for you.
Once you have your budget in control and your debt is slowly being paid off, don't stop there! Look for other ways to save and be sure to monitor your progress as you go. It's always smart to make adjustments as you progress and start building your emergency fund.”
Spend Less, Invest More.
Eric Rosenberg, Founder of Personal Profitability
Spend less than you earn and save and invest the rest. If you can consistently do this over time, you should be on track for a solid financial future.
You can do this by living on a budget, making smart financial decisions, and working toward financial big wins. Look at recurring expenses and large costs like housing and transportation for big money wins.
And never underestimate your ability to earn more through a raise, promotion, or side hustle.
Money is a Tool
Steve Adcock, Founder of Think of Save Retire and Early Retiree at 35
Money is a tool. Like a hammer or a nail gun, it’s a tool that can be used to build virtually anything that we want. “
The choice is ours.
We could use the money to build a life full of consumption. We can buy the big house on the hill, or the pricey import luxury car, the expensive suits and nice dresses, dinners at high-priced restaurants, season tickets to sporting events, etc.
Alternatively, we could use that money to support the basic necessities of life and protect our futures, like living in a more reasonable home and driving a normal paid-off car, maintaining a 6-month emergency fund and investing the rest for our future retirement.
Or, something in-between.
We build lives for ourselves using the money that we earn. The more money we earn, the more buying power that we have, and naturally, we can use this buying power for virtually anything. We think those additional things make us happier. And, this is where many of us fall into the basic money trap.
Everybody’s financial goal should be simple: use money strategically.
Use enough money to maintain your family’s basic needs (and maybe a little more), then save and invest the remainder so you won’t need to spend the rest of your life working for the privilege of spending. Working to spend is a sucker’s game. Saving and investing to achieve freedom from money is the smartest decision that anyone could ever make.
Fund Your IRA
Allan Liwanag, Creator of The Practical Saver
One of the money goals that one needs to have is to open and fund an Individual Retirement Account (IRA).”
While it may seem that retirement is far away when you are in your 20s or 30s, it is really important to open and fund your IRA as early as possible. Like what many people say, time is your best friend when it comes to investing in the stock market.
The early you put money towards your IRA, the greater the chance your money will grow for your retirement. A small amount of contribution to your IRA can go a long way.
Believe it or not, there are a lot of people who want to retire but can't because they have not saved money for their retirement.
You'll see people working past 60 years old because they need the money and can't afford to not work to sustain their needs.
Most, if not all, of us want to retire at some point and enjoy the fruits of our labor. You want to ensure that you're financially sound when the time comes to retire. Opening an IRA and contributing to it will enable you to do so.
Having an IRA in place early on in life will help you to feel secure when retirement comes knocking.
Invest In Your Health
Henry Gorecki, Financial Planner & Owner of HG Wealth Management
I’ve been in financial services for over 30 years, and I now have a fee-only financial planning practice in Chicago, IL. Looking back, I see that the following two goals are extremely important not only for long-term financial health but for a healthy, fulfilling life as well!
Invest in yourself.
Every year try to spend a certain amount of income on ways to improve yourself and your life. Learn new skills for your business. Perhaps learn something totally different from your career.
The key is to keep learning and growing!!!
Invest in your health.
When you’re younger, it’s easy to eat and drink whatever you want and look and feel great. However, at around age 30, I’ve seen the masses diverge into the healthy and not so healthy.
By age 50, the differences can be shocking. So keep that health club membership (and use it)! Buy nice, workout clothes that may motivate you to run. Eat healthily. Buy a few important things at Whole Foods or some other organic source. It’s very difficult to enjoy life if you’re sick.
And being sick is expensive!
Create Multiple Streams of Income
Logan Allec , CPA and Founder of Money Done Right
First, be sure to pay off or refinance all high-interest debt by the time you're 30.”
– Logan Allec, Money Done Right.
Maybe you'll never have a seven-figure stock portfolio, but one goal you should have is to pay off or refinance all your high-interest debt by the time you're 30 years old.
Now, the definition of “high-interest” will probably vary from person to person (and even from economic climate to economic climate), but right now a good rule of thumb is that you should probably have all your debts with a rate over 5% paid off by the age of 30.
This will free up abundant cash flow for you to invest in income-producing assets and achieve your financial goals.
Once you've dealt with all your high-interest debt, you should aim to develop at least one stream of income in addition to your job.
This doesn't have to be a 200-unit apartment building. It could simply be a few dividend stocks.
The point is that you want to get in the habit of making your money work for you — however little you have at the moment — so that when you start making more money, you will already know how to be smart with it.
Financial Goals For A Family
Andy Hill, Founder of the Marriage, Kids & Money Podcast
From a long term perspective, the best two actions our family has taken to secure our financial future would be investing in tax-advantaged retirement accounts (401k, IRA, HSA) and completely eliminating debt from our lives in our early 30's.
These two actions helped us to both dramatically lower our annual expenses today and pile up a boatload of cash for the future. This was a recipe for major stress reduction personally and for our family.
Create a Will ASAP!
Allison Kade, Millennial Money Expert at Fabric
First thing is first, make sure you save for retirement. I know it's not the sexiest of goals, but as they say – you can get a loan for most things in life, from a house to a college education, but there's no such thing as a retirement loan.
With life expectancies growing, having funds for retirement is becoming increasingly important. After you start funding your retirement, make sure you create a will.
Many folks don't think they need a will because they don't have a ton of assets, but if you have children, then writing a will can be a key way to designate a guardian who should watch them if (Heaven forbid) something were to happen to you.
Financial Goals Should Fit You!
Eric Nisall – Entrepreneur & Speaker
The best money goal you should strive for is that which fits your specific individual/familial situation”
People online write about their stories but not everyone is the same or a similar situation and you may sometimes feel like a “failure” if you can't keep up.
You need to take everything with a grain of salt and make it about you
- If you specifically want to ensure that your child(ren) can attend college then focus on that.
- If you are aiming to take a side business full-time, then focus on building that savings fund.
- If you have no interest in investing in real estate – then don't do that.
Make Sure Your Bucket List, Isn't a Wish List.
Ryan J., Founder of Arrest Your Debt
By far the best money goal someone should have is to ensure their retirement funds will allow them to do everything on their bucket list.
We only live once and there is enough wealth in this world to achieve most anything you would like to experience – if you intentionally manage and invest your money.
Getting out of debt is the first step in this process. Once you manage to get debt free, you can begin to build wealth so you can achieve your financial goals for both you and your children.
At the end of your life, you should not have any regrets tied to money (If you can help it).
Automate Everything
Spencer Barclay, Founder & CEO of Savology.
It is easier than ever to automate your personal finances, but it does require some effort. Set a goal to automate as much of your personal finances as possible. You still need to be actively involved with your money, but leave the heavy lifting to technology.
Don't count on saving what's left over to be enough. Determine how much you want to or need to be saving to build your emergency fund and investing to fund your retirement. Automate those transfers as well with each paycheck to make sure you are always paying yourself first.
Then, set up automatic payments for all your bills to keep your credit healthy while reducing the stress of remembering to pay each bill. This includes utilities, credit cards, medical bills, auto loans, student loans, and anything else with payments.
Pretty soon, you will find that you have all but eliminated the risks of human error and the follies of decision making on your journey to financial security.
Never Stop Learning About Personal Finances
Todd Kusman, Founder of Invested Wallet
Too often, as you learn more about money and improve your financial literacy you get too comfortable.
While the basic concepts of building wealth, investing, saving and all that good stuff doesn’t exactly change — continuing to keep your mind active about money is key to success.
Many times, when I’ve re-read some books about finances, I discover something new I missed or it refreshes a concept I completely forget about or overlook prior.
Additionally, authors and content creators have various experiences and opinions, that sometimes an old take on an investing strategy or process can make me think differently.
Learning should never end with money! That means reading books, follow various blogs, check out different personal finance conversations on Reddit, and begin listening to podcasts about money too. It’s one of the best money goals you can have and a relatively easy one too.
Start Investing, Yesterday.
Kevin, Investing Blogger at Just Start Investing
Investing is necessary in order to retire and grow wealth, and there is no better time to start investing than today”
Investing doesn't have to be hard or complicated.
It can actually be very easy to invest on your own if you choose the right strategy. Index investing is an investing strategy recommended by countless experts, from Warren Buffett to John Bogle (Founder of Vanguard).
For what it's worth, index funds are highly regarded for yielding solid returns at a very low cost, and for just being plain easy. Anyone can invest in index funds on their own, and usually, you only need 2-3 investments total to build a fully diversified portfolio.
So when it comes to financial goals, don't wait another day! Learn how to invest in index funds in just 5 simple steps.
Setting Financial Goals, The Verdict:
Trying to be a good steward of money by creating some financial goals shouldn’t result in “Paradox of Choice,” the stress-inducing effect we experience when we have too much to choose from.
As we get older, it is like the list gets longer…
- Budgeting.
- Investing.
- Saving.
- Paying off debt.
- Paying off bad debt, but keeping good debt.
- Making more money.
- Side hustling.
- Creating passive income.
- Leveraging compound interest.
- Doing what makes you happy.
However, if you didn't catch a trend from these money experts, just about every goal fell into one of four categories:
- Make more money
- Spend less money & pay down debt
- Save or invest more money
- Have financial goals so you can be happy & prosperous
So really when it boils down to it – if you set one financial goal per category for yourself, you're on the right track.
Maybe you take Alec's advice and start looking to create another stream of income, while simultaneously using Michelle's advice and saving 10% of your pretax income for retirement.
Perhaps you want to make sure you become more efficient with your time as Kelan alluded to, so you can enjoy spending time with your family but you also want to cut out wasted spending like Douglas clearly stated.
When creating your money goals be sure to have one saving goal, one goal for spending and another for increasing what you earn. But at the end of the day, just remember…
No matter what you do, make sure your financial goals fit your needs and will end up creating the life you desire!!!
Question: What is your biggest financial goal?
Josh writes about ways to make money, pay off debt, and improve yourself. After paying off $300,000 in student loans with his wife in less than five years, Josh started Money Life Wax and has been featured on Forbes, Business Insider, Huffington Post, and more! In addition to being a life-long entrepreneur, Josh and his wife enjoy spending time with their chocolate lab named Morgan, working out, being outside, traveling, and helping others with their finances! I got serious with money when I used Personal Capital to track my finances.
Some great advice here and some great people giving the advice.
The only one I think I really can’t see being feasible for my family is making 3-5x more than we spend. Although I always look at our income from post-retirement contributions. Maybe we’d be on the 3x end, but living in the suburbs of NYC it’s hard to keeping costs low. Our mortgage payment is only $847, but our property/school taxes are higher than that.
I think it’s hard to come up with an exact figure, as far as spend X times less than you’re making, but setting saving targets and monitoring your expenses to make sure you’re spending below your means is the most important thing.
Hi Courtney,
I agree with making 3-5x more than you spend. You can only cut out so much or budget so much, before you have to figure out ways to make money. If I could add, I would say budget 25%, spend less 25%, and spend the other 50% of your financial focus/energy on making more!
I really liked the comment about learning more about accounting. I haven’t dived into that field much but its sounds like its worth my time. I don’t plan on changing careers but just enough to figure out the “big” stuff!
Also, the comments about “investing in your health” were insightful. Just the fitness reminder that I needed!
Health is wealth! I am actually in the process of learning about Tiller Money for accounting purposes. Gotta streamline my accounts! They use google sheets which is my fav. Thanks for commenting!