Setting Financial Goals
As people get older, they begin to understand the difference between financial needs and wants. Maybe you want to buy a new tablet? Possibly go on a vacation? Or buy a new car? Taking the time to set financial goals and plan for the future will get you closer to fulfilling your goals and desires.
Short-Term Goals – Daily Living Expenses
As you begin living independently, you’ll discover that there are regular monthly expenses for which you will need to budget. Saving money each month can be difficult, but if you plan ahead and get in the habit of doing it, you can make it work even if you are not yet making a lot of money. The Spend, Save, and Share system can help you 1) determine what to do with your money and 2) build good financial habits.
- Spend – Buy what you need & treat yourself occasionally to something special
- Save – Set aside money for future needs and unexpected expenses
- Share – If you can, donate some of your money to a cause you believe in
Long Term Goals – Asset Building
An asset is anything you own that has value. You can have two types of assets:
- Financial Assets are the different bank accounts that hold your money
- Tangible Assets are things you own that are high in value like a car or a home
As a young adult, it’s important to start building your financial assets as they are vital to your financial stability and transition into adulthood. By being proactive and financially aware, you’ll increase your chances of achieving your financial goals. Not only that, you’ll avoid 1) the stress of living paycheck to paycheck and 2) financial hardships in the future. For more information, check out this article on money tips for young people.
Note: If you receive SSI, there are limits on how much you can save and own and still be eligible for SSI.
Long-Term Goals – Individual Development Account
An IDA is a type of savings account that matches a percentage of the money you put into it. If you qualify for an IDA, you must complete a financial literacy course and your savings must be used for an asset-building purpose such as education or job training, or to purchase a home or start a business. To see if you are eligible and if an IDA is right for you, watch this brief video. Find an IDA program near you.
Long-Term Goals – Retirement
We know it seems like a long time away, but saving for retirement beginning in your 20’s is highly recommended. You should consider investing in your employer’s retirement plan, if they offer one (they’re called 401(k) plans). Some employers match a percentage of what you put in, which is a great benefit! You can also open your own retirement savings account (this is called a Roth IRA — Learn How Roth IRAs Give Gen Y a Fighting Chance. There are a lot of things to think about when it comes to financial planning and retirement is one of them. It’s never too early (or too late) to start!