If you haven’t realized it yet, I’m a big fan of setting goals. I start each day writing down 5 things I am grateful for along with the goals I’ve set for myself. I write them down EVERYDAY and then creating a plan for how to achieve them.

For example, I have 10 goals that I want to achieve within the next ten years. From there, I set goals for the next year that will help me work towards the bigger goals. And, I set monthly goals to further drill it down. (You can checkout some of my monthly goals on my Instagram page: @smartmoneyjackson or facebook: @FinancialJackson.

Here is a list of my 2020 Goals:

• Save 50% of our net (after-tax) income
• Read 1 financial book each month
• Exercise 4-5 days per week
• Use less plastic
• Reduce my carbon imprint

Not all of my 2020 goals are financial related because I want to focus on all areas of my life.

My big financial goal this year is to save 50% of our after-tax income.

My husband & I are in the financial cycle phase of life called “wealth accumulation”. See illustration below for the stages of an individual’s financial life cycle:

Your age and your financial life cycle will help guide you on which financial goals to set for yourself. Listed below are several ideas from which to choose from but there is a hierarchy or priority that should be placed on which goals you work on first.

Order of Priority for Road to Financial Independence

1. Save $1,000 for your starter emergency fund.
2. Payoff all credit card and student loan debt.
3. Save 3-6 months of expenses in a fully funded emergency fund.
4. Invest 15% of your household income for retirement.
5. Save for your children’s college fund.
6. Build wealth and give charitably.

Keep the above order in mind as you choose from the following list of financial goals.

My Top Financial Goals Idea List:

1. Create and stick to a Budget
2. Live below your means
3. Cut spending
4. Payoff all credit card and student loan debt
5. Have an emergency fund of at least $1,000
6. Have a fully-funded 3-6 month Emergency Fund
7. Save and invest a minimum of 15% of your household income
8. Plan to leave your financial house in order upon your death – aka: make a will

1. Create and stick to a budget

Creating a budget is the foundation for all financial success. I really feel like this is the most important thing you can do for your financial future. Regardless of whether you think you are too poor to budget or too wealthy to budget, you’re not. I’ve written a blog post on how to create a budget. You can access it here.

2. Live below your means

It’s a simple math equation. If you spend more than your income, there’s debt. If you spend less than your income, there are savings. Being able to live on less than you earn is a simple concept but not easy, especially if you’ve already accumulated debt. There are 2 ways to live on less than you make: cut spending (discussed next) or increase income. You can increase your income with a side hustle like driving for uber/lyft; food delivery; selling “stuff”; etc.
I prefer a combination of both. Whatever method you choose, making it a priority and committing to your plan are essential to making it a reality.

3. Cut spending

Here are some ways to cut expenses on everyday items and free up money for other goals like debt payoff, house down-payment, or wealth accumulation:
Cut back on television streaming services; raise insurance deductibles; eat out less; food prep to reduce grocery bill; go through utility bills to see where you can reduce; install LED lights; cancel gym memberships and subscriptions.

4. Payoff all credit card and student loan debt

Pay off all debt using the debt snowball method. Start by listing all of your debts, except for your mortgage. Put them in order by balance from smallest to largest. Start putting as much money towards the smallest debt while paying the minimum amount on the other debts. Once you’ve paid off the smallest debt, move onto the next smallest, applying all the funds used on the first debt plus the minimum payment you were paying. Focus on one balance at a time, but make minimum payments on the others so you don’t become delinquent.

5. Have an emergency fund of at least $1,000.

Emergencies are going to happen – whether it’s a flat tire, an unexpected medical bill, or a sudden loss of income.
None of these things are planned for, but they can happen any moment, no matter how careful you are. Start by saving $1,000 and then tackle your debt. If you are debt free, move to financial goal #6~ a 3-6 month emergency fund.
By the way, if you accomplish this goal, it will put you ahead of 57% of Americans!

6. Have a fully funded 3-6 month emergency fund.

The amount you need depends on your life cycle status. If you are single, or married with no kids and both of you are working, 3 months of expenses saved up is sufficient. If you are married and have kids and especially, if you only have one source of income, I recommend having a 6-month emergency fund.

7. Save and invest a minimum of 15% of your household income

The more the better. Payoff your debt first!

8. Make a Will

A will = being responsible to those you love. A will is simply a piece of paper that states who you want to get what when you die A will states what YOUR wishes are. For more on why a will is important and how to create a will, read my blog post here.

To Summarize:

Going through your adult life without having some concrete goals is a lot like sailing a ship without a destination. You have no idea where you are going and, what’s worse, the longer you stay lost on your finances, the harder it will be to correct your course and reach your desired destination.

Set some financial goals. I’ve provided some ideas above but feel free to create your own that are best suited for your stage of life. I would would just strongly suggest that you follow the guidelines set above and don’t go out of that order. Why? Saving while you are in debt is like swimming upstream. If you have debt, you’re being crushed by interest. Before you can start saving and take advantage of the power of compound interest, you need to stop the bleeding.