5 Financial goals to work towards
It’s important to have achievable financial goals, whoever you are and whatever it is that you earn. Here we define five financial goals to aspire towards, and some tips on how to achieve them.
1. Become debt free
This is the most important goal. If you are badly in debt, seek help by contacting a debt counsellor. If you have minor debt, focus on paying it off before you begin to save. Putting aside savings whilst paying off debts creates a false economy. Don’t get caught in this trap. For advice on clearing your debts, read our simple debt guide.
2. Build your savings
The goal should be at least six month’s salary worth of savings. If this feels impossible, aim for three months initially.
Always include your savings in your budget. This site is full of tips on how to save with everyday goods such as grocery shopping or medication and toiletries. It’s simple: the less you spend, the more cash you’ll free up to put aside each month. Make sure your savings are in a high-interest savings account that works for you, and keep up to date with the latest savings accounts available on the market to ensure you are always getting the best possible deal.
3. Be prepared for retirement
As long as you haven’t got any major debts to pay off, you should begin paying money into your pension fund as early as possible. These contributions should exist separately and on top of your long-term savings: Justmoney estimates that even those on an employer-backed pension fund may still need an extra 30% to 70% on top of their retirement pay-out to live comfortably after retirement. The amount you deposit into your pre-retirement fund is dependent on two main factors: a) How much you earn and b). How long you have until retirement. Take a look at our pension fund guide for more information.
4. Get covered
Your goal here will differ depending on your situation. If you have dependents, you need to make sure that any debts will be covered in your absence, and that your family will be able to survive financially without you.
If you are single, it is important to make sure that you are at least covered for dread disease and income protection insurance. There are various insurance plans available. From dread disease to critical illness to disability insurance, the vast array of options can be confusing even if you are not applying for the first time. The question to keep front of mind and to ask your insurance broker is, “What will my financial situation look like if I was diagnosed with a dread disease (cancer/ stroke/ heart attack, etc.)?”
Investing your money wisely is an effective means to building wealth. But where to start? First, you need to create an investment strategy which is aligned with your lifetime goals. Whether it is a unit trust or buying a property, everyone’s investment requirements and long-term goals are different. Take a look at our investment tips for more advice on how to invest.
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