Tackling your goals one bite at a time is very important. Attempting to accomplish ALL of your goals at once will frustrate you and demolish your motivation to continue with your commitment. Let us look at three of the top common financial goals:
- Building an emergency fund
- Buying a house
- Getting out of debt
Focus on these three areas first, then move to others such as, caring for elderly parents, paying for a child’s college education and saving to retire comfortably.
Building an emergency fund should become a top priority before you are forced to make it a priority. What do I mean by that? It is financially dysfunctional to operate your household without an emergency fund. When an emergency happens without an emergency fund in place, you will be forced to make that emergency, a top priority. A domino effect happens when financial adjustments become a necessity. For example an individual at times could be forced to ask for a loan from family, friends or applying through a financial institution.
A great starting point for your emergency fund could be $500-$1000. Overtime increase it to cover at least three to six months of your monthly obligations. My view is that it is more practical to save to cover your monthly obligations, than to save the amount of your monthly income (just in case your monthly obligations exceeds your monthly income).
Buying a house is believed to be one of the American dreams. Purchasing a home is a major responsibility and it is important to consider your motives for becoming a homeowner. Ask yourself, can you afford the payments, the upkeep (repairs of all sorts)? Can you afford the mortgage insurance; do you have plans to live there a long period of time? Is buying for you or does renting fit your lifestyle?
There are benefits to owning a home such as, greater privacy, homeowners receives certain tax deductions, property value could increase over time, provides a more established foundation for your family and fixed mortgage rates supports a more predictable monthly payment than renting.
Getting out of debt should be a long-term goal and for some a short-term goal. Deciding to, seriously, make the sacrifices that are needed to become debt free relieves stress, gives you a peace of mind and financial security. Remember to tackle your financial goals one bite at a time.
Follow us this week; you will be compelled to commit to “setting” realistic goals and “seeing” them through and/or re-commit to the goals you have already made and allowed to go dormant.
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