Whether you want to move into a new apartment, achieve a promotion at work, or pay off debt, a new year (or start of a new month) is the perfect time to evaluate your financial goals and make plans to accomplish them.
What are financial goals?
A financial goal is a target you want to achieve when managing your money. Creating a list of financial goals can help you visualize your desires so that you can budget, save, and plan accordingly to make progress on all of your goals throughout the year.
Why is it important to have financial goals?
Financial goals are a way for you to create a realistic plan for the future, both short- and long-term. If you don't know how much and how often to save, it can be hard to achieve financial freedom or success. For example, if you know you want to buy a house, you can start budgeting for a down payment and saving at the beginning of the year to help achieve this long-term goal.
By setting financial goals, you can prioritize your finances, create accountability, track your progress, and celebrate your successes along the way.
No matter what your financial goals turn out to be, having a robust savings plan can help you achieve them. If you don’t have a savings account already, Huntington is here to help.
What are short-term financial goals?
Short-term financial goals are for expenses that you can save up for in a shorter timeframe based on your income and budget. Although timelines can vary depending on your circumstances and plans, short-term goals are typically the expenses you save up for within a few months to a year.
Short-term financial goals can include:
- Starting an emergency fund.
- Paying for a wedding.
- Making minor home improvements like new appliances or fresh paint.
- Paying off smaller debts like credit cards or outstanding bills through consistent payments.
- Paying for a weekend getaway.
What are long-term financial goals?
Long-term financial goals are usually big-picture costs. These goals may take several years or even decades to reach. These distant goals typically involve more money and require more patience than short-term goals.
Long-term financial goals can include:
- Contributing to a retirement fund.
- Paying off a mortgage.
- Starting a small business.
- Saving for your children’s college tuition.
- Paying off long-term debt like student loans.
Financial goals, both long- and short-term, are going to be unique from person to person. No two financial situations are alike, and neither are your goals compared to anyone else’s. However, if you need some inspiration to help you strategize your plans, we have a list of 10 financial goals for the year to help you get started.
1. Cut spending.
Take a good, hard look at your finances and check for areas where you can cut spending. Even the smallest cutback can add up in your savings over time. As a Huntington customer, you can use Spend Analysis to track how much you're spending, and exactly where you're spending, in categories like groceries and entertainment. It will analyze your expenses so you can easily see exactly where your money is going. If you’re not a Huntington customer, you can still categorize your expenses and analyze them to help you cut spending throughout the year with other resources.
2. Stick to a monthly budget.
Sticking to a monthly budget can help you stay on track for your savings goals and help you avoid overspending. To make a budget, record all your sources of income, make a list of your essential monthly expenses, and come up with the total that fits your family’s needs and maintains your financial stability. Make sure to take seasonal spending into account for things like winter clothing, air conditioning, and gifts for holidays and birthdays.
Huntington has Spend Setter℠ to help you set budgets for categories where you'd like to tighten up your spending. Then, it calculates your budget and lets you know how you're doing along the way. Keeping a budget can help you cut back on unnecessary spending and give you more of a chance to save money you can put toward your financial goals.
3. Pay off debt.
Set a yearly goal for how much debt you want to repay, and then work backward to calculate how much money you’ll need to make or save each month to hit that goal. If you follow a debt repayment plan, you can help speed up how quickly you pay off your debts and have more freedom to save up for other financial goals.
For example, you may want to start making significant payments on your student loans at the start of a new year. If you have multiple loans, it may benefit you to consolidate your loans into a single loan with only one payment due per month. If you want to pay off your credit card debt, you might apply a few extra dollars you’re saving from spending cutbacks to your monthly payment instead of sticking to the minimum amount due.
4. Avoid adding debt.
Plan ahead for any major purchases or expenses in the new year to avoid incurring more debt. It can be easy to fall into bad habits, especially around holidays and other exciting times that occur later in the year. Taking on a little extra credit card debt to pay for a new appliance or a weekend trip can feel justified in the moment, but you may end up making higher monthly payments and negatively affecting your credit score in the future.
If you can commit to not borrowing money for the year, it can help you make significant strides toward paying off your current debt and eventually achieving more financial freedom. To help you avoid going into further debt because of accidents, natural disasters, and other unforeseen events, consider saving up an emergency fund.
5. Save up an emergency fund.
One way you can plan ahead for accidents and unexpected expenses is to create an emergency fund. Whether you’re just starting an emergency fund or planning to add to an existing one, you should aim to save up to at least three to six months of your living expenses for emergencies. That amount of savings can go a long way toward covering emergencies like car breakdowns, household repairs, hospitalizations, and more without accumulating more debt.
Try using Savings Goal Getter℠ to help you save up for anything from the trip of a lifetime to extra cash for a rainy day. You can add up to 10 savings goals, plus an emergency fund. If you’re new to saving up for an emergency fund, you can start small by setting a goal to save up to $1,000 for emergencies. It’s a helpful foundation you can build on now and in coming years.
6. Start saving for retirement.
While it may feel like retirement is ages away, it’s important to start planning your retirement savings early, so you have more time to save up the funds you’ll need in the future. If your employer offers a 401(K), consider taking advantage of it by contributing funds up to the maximum amount you can. A 401(K) plan can help you save up for retirement much faster than other ways, especially if your employer offers contributions through a matching program.
If a 401(K) isn’t available to you, consider saving for retirement in an Individual Retirement Plan (IRA) or similar accounts. Adding consistent contributions to your retirement fund can help you build good savings habits and provide you with a growing nest egg to help support you in the future.
7. Advance your career.
While it may not seem like a financial goal at first glance, taking steps to advance your career in a new year can help you achieve multiple goals at once. You may want to strive for a promotion, a raise, or other achievement that can help advance your career goals and your compensation. Studying up for a new certification or license can also give you a much-needed boost in confidence and possibly increase your paycheck.
If you’re unhappy in your job, maybe it’s time to polish up your résumé and look for a better paying position that can help you achieve your financial goals. Or you may decide you want to finance the opportunity to go back to school, get a new degree, and start a new career path altogether. Any career decision you make within a new year can affect your finances and may help brighten your future.
8. Improve your credit.
Improving your credit can help you immensely in the future, especially if you have long-term goals that involve loans requiring good credit for approval.
You can help improve your credit by taking the following steps:
- Paying all your bills on time.
- Paying your credit card bills off in full every month.
- Utilizing no more than 30% of your available credit.
If you’re unsure of your credit score, you can learn more about how to check your credit score and understand the way it’s calculated.
9. Save up for a house.
There are a lot of benefits to homeownership, but you typically can’t get to that point without a down payment. While envisioning this long-term financial goal, the classic advice is that you should plan to put 20% of the purchase price of your home as a down payment. However, that may not be the case as we move toward the future. Survey data found that 71% of Americans who bought their first home in April 2021 put down less than 20%†.
Instead of dwelling on a 20% down payment that could amount to over $100,000 depending on the market in your city, focus on being able to afford a monthly mortgage payment. That may seem like a daunting amount now, but planning some short-term goals can help you save over time to achieve the cost of a small down payment and a monthly mortgage.
Short-term goals that can help you save up the money for a down payment on a house include:
- Paying off any high-interest debt.
- Trimming your budget for discretionary spending.
- Consolidating insurance policies with one carrier to get a bundling discount.
- Setting aside extra money such as raises, seasonal bonuses, and funds from your side hustle or entrepreneurial endeavors.
10. Save for a vacation.
Everyone deserves a little rest and relaxation. No matter if it’s a camping trip, a beach vacation, or a staycation in your hometown, it’s important to save for a getaway you and your family can enjoy. Travel expenses can add up quickly, between lodging, food and fuel costs, sightseeing, relaxation activities, and souvenirs. Take the time to plan and budget out a realistic vacation fund for you and your family and start saving up at the start of the year. While you’re in the planning stages, make sure to check out our tips and tricks to help you save money on vacation.
No matter what your short- or long-term financial goals, make sure you take the time to celebrate your wins, learn from your losses, and encourage yourself and your family along the way. Make strides at your own pace and don’t compare yourself to others. If you need help along the way, we’re here for you.