Building wealth with your partner is a challenge that can take a lifetime. Creating smaller, achievable goals to celebrate your financial wins is key! Here are five of the best financial goals to set for your future.
One of the biggest questions I personally had about financial planning was, “when should a young, normal person start saving?”
The answer? Probably as soon as they’re born.
As young children, very few of us were lucky enough to be educated by our public schooling system about how to manage our money. While building wealth takes a lot of time and persistence, you won’t get anywhere without knowing first where to start. So, here are five financial goals to set for your future.
Debt can be extremely destructive to your financial health.
If you or your partner lose their job and steady source of income, debt can be crushing. Student loans pile up, car loans run rampant, and credit cards get out of hand. The best place to start with building your wealth is to tear down that debt of yours.
There are plenty of methods for paying off debt, but the two most prominent are the Debt Snowball and the Debt Avalanche. The Debt Snowball method means taking the debt with the smallest balance and paying it off (no matter the interest rate), then working your way up from there. On the flip side, the Debt Avalanche means paying off your highest balance first and then working your way down to the lowest, based on the accompanying interest rate.
Whether you use the Debt Snowball or the Debt Avalanche method is up to you, but one thing’s for certain – that debt has got to go.
In order to expect the unexpected, you’ll need to set up a rainy day fund. A rainy day fund is a relatively small amount of money stashed away that does not get touched except for emergency situations. These funds are typically around $1,000 each – just enough to provide some assistance when your car breaks down or something else pops up.
Unfortunately, 69% of Americans have less than $1,000 saved. The reality is that many individuals and couples struggle to get by with their finances and are living paycheck to paycheck. You will thank yourself for any amount of cash that you can put away when an emergency strikes.
When it comes to saving for retirement, the earlier that you start saving, the more you’ll end up with. Traditional retirement accounts aim to bring a percentage of return to the investor over a long period of time. So, the longer that you let your money work for you, the more you’ll make.
There are tons of options when it comes to saving for retirement, and they’re cheaper and easier to get started with than ever before.
Many employers offer a 401k plan as a benefit to their employees, and some will even match your contributions up to a certain percentage. If you’ve got an employer who will match any percentage of your contributions to your 401K, consider contributing as much as possible to maximize your investment return in the future!
After you’ve hit $1,000 saved and have started on your journey toward retirement, it’s time to think about “the in-between.”
Many financial advisors and financial planners counsel their clients to save up at least 3-6 months’ worth of expenses. This is a fantastic buffer to have on the off-chance that you or your spouse lose your job, but it can also be incredibly useful if you want to intentionally take a sabbatical from work.
Consult your budget and identify what your fixed living expenses are; what are the things that you’ll have to pay every single month without fail? These are things like your mortgage or rent, not your Netflix subscription. Multiply that number by however many months you want your safety net to sustain you for, and boom, you have your next goal.
Your last goal can be pretty subjective – it’s up to you to decide what you’d like to save for! Are you and your partner feeling the need to purchase a house? Perhaps you’re more interested in starting a business and need to save up some capital. Either way, creating a plan for your future and discovering your goals together is a great way to strengthen your relationship.
Just remember, building wealth together takes time and commitment, just like building a successful marriage!
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