Financial Goals to Achieve in the Next 10 Years

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Slow and steady wins the race. While you may want to tackle all of your financial goals at once, putting a little money here and a little money there, there actually IS a preferred order on how to achieve financial goals.

What are some financial goals to accomplish first? Always look long-term and ask yourself this one simple question: what makes the most sense to start off with? For example, a new car may sound nice, but if you have no emergency fund, you’ll definitely want to do that first!

Need a little more clarity about where to start and what to do first? No problem!

This article covers 4 of the main financial goals you may be working towards and which order they should be prioritized in. Whether you’re looking to eliminate debt or invest, there is an order of priorities when it comes to setting financial goals.

1. Save A 6-Month Emergency Fund

No doubt, an emergency is scary. Whether or not luck is on your side, you never know when an emergency might strike. Being financially prepared for one can be the difference between going into crisis mode versus adapting to the situation. Building an emergency fund should be the very first of the financial goals to achieve.

These funds are only to be used for unexpected expenses such as hospital bills, car accident repairs, or an unexpected job loss. While you may be tempted to use it for monthly rent or food, it should only be touched for unforeseen circumstances.

To create an emergency fund, calculate your monthly expenses. In the event of a job loss, the funds should support you until you get back on your feet again. Include your rent or mortgage payments, other loan payments, bills, groceries, transportation, and other monthly expenses.

Determining how much to save changes for each household and will look different for each family. Once you know your monthly expenses, you will want to try and save anywhere from 3-6 months’ worth. This fluctuates depending on how much other debt you may have and your job security.

Don’t worry too much about the number in the beginning. Just start saving and try to get to the $1000 mark first. Then save at whatever pace you’re comfortable with until you hit six months saved.

Where to Save Your Emergency Fund

Always put your emergency fund in a high-yield savings account. Not only will you save money, but you’ll earn interest on it too. Keeping the fund in a separate account from your other savings will ensure you don’t accidentally spend it. Out of sight, out of mind.

When choosing a high-yield saving account look for one that has no fees for regular use, no minimum balance or transfer requirements, and has an APY of at least .5%. I currently like Axos Bank because it ticks off all these boxes and has a .61% interest rate.

For more info on what an emergency fund is, check out this post here.

How to Save for an Emergency Fund

When you have no savings and little income coming in, it can be daunting, and you may be wondering how to even get started. Here are a few ideas to get you started on your emergency fund:

• Eliminate any of your non-essential monthly payments. This can mean taking a look at any monthly payments such as gym memberships or subscription boxes. It also means limiting monthly spending on shopping and eating out. You’d be surprised how much dining out eats up the wallet!
• Get a side gig going. While you’re saving for an emergency fund, consider adding a second income stream to help you reach your goal. Play to your strong suits, whether that is dog-walking or freelancing in your spare hours.
• Budget, budget, budget. You always need to know where your money is going. Once you know what you need to live, you can differentiate any extra money into what is for saving and what is reserved for all the fun stuff. Live on a small percentage of your income, and the saving will be simple.
• Use a cashback credit card. Strategically using your credit card for spending means you can get cashback on all your purchases. Or course, make sure you can pay off your credit card every month for this method to be worth it.
• Did you know you can negotiate your bills? In a matter of a couple of ten-minute calls, you can lower your monthly expenses on bills such as internet, cable, and your cellphone.

Check out my post on tips to build your emergency fund for more ideas.

2. Pay Off All Non-Mortgage Debt

When you have debt, sometimes it can feel like there is no end in sight. With careful planning and a change in thinking, it doesn’t have to feel so overwhelming. Eliminating debt allows you to save for a better future, keep your family in mind, and even allow for early retirement. Who doesn’t want that?

The real culprit, interest on debt, can suck away your money. The additional interest never stops accruing on the money you owe, so you have to get ahead to see any change. Just paying the minimum won’t get you any closer to paying off the debt.

• The first step to paying off debt is knowing your interest rates on all your debt. If you have different credit cards, for example, see which one has higher debt. Eliminate the one that costs you the most first. If you don’t know your interest rates, ask your loan lender.
• Next, set up automatic transfers, so you never miss a deadline to pay the minimum balance on time. Preferably, pay every bill in full whenever possible.
• After setting up a small emergency fund, any extra money you have should go to completing debt. It’s important that any of your payments go to the principal amount. This means you are paying for the money you actually owe, not the interest. Lowering the overall amount helps to keep interest payments lower. Call your lender if you’re not sure where your extra money payments are going.

Now, remember this article is titled “Financial Goals to Achieve in The Next 10 Years” not 2 or 3 years. Some people will prefer getting all their debt paid off quickly, if that’s not you that’s totally ok. But that doesn’t mean it’s ok to keep debt forever. Make it a priority to pay off non-mortgage debt as quickly as you feel comfortable with and make sure it’s gone within 10 years.

3. Max Out Roth IRA Contributions

Once you have an emergency fund and are debt-free, the next of the financial goals to achieve should be retirement. The quicker you start saving for retirement, the more time it will have to grow. Every year makes a difference to retiring early or with a more secure financial future.

IRA stands for individual retirement account. An IRA account is an individual retirement savings account that is separate from anything your employers provide. A 401(k) is typically sponsored and matched by an employer.

Good news, you can have both types of accounts! If you already have a 401(k), consider opening a Roth IRA account as well. While the contribution limit is lower for an IRA, you get more control over what investments are inside and their fees.

Types of IRA Accounts

There are three main types of IRA accounts: traditional, Roth, and SEP. Typically, Roth IRAs are the best option out there. You can open one at any age as long as you’re working. No minimum distributions are required. The main difference that sets a Roth IRA account from the others is that you pay the taxes now.

Why would you want to pay the taxes now? Well, this guarantees you will have a tax-free future. There is no way to predict what taxes will be like in the future. But you do know what they are like now! While your current income will be affected, you will receive tax-free growth. Future you will thank you.

The max contributions are $6,000 a year or $7,000 a year for those 50+.

My go-to places for opening a Roth IRA are Fidelity if you want to have total control over your portfolio or M1 Finance if you want your portfolio options chosen and rebalanced for you. I use both for other investments and can’t say enough good things about them.

For most beginners, M1 Finance is the best option. It offers low-fee investments and charges no advisory fee.

4. Buy A House

The last of the main financial goals to achieve, and arguably the most exciting one, is buying a house! While the idea of being in debt can be daunting, especially if you worked so hard to get out of debt, learning to sit comfy with a mortgage is important.

But renting sure can be a bummer. Not getting to make your own decisions about your home, dealing with landlords for issues, and feeling insecure about staying can all play a part in wanting to make the leap into purchasing a home.

However, renting may be cheaper than paying a mortgage. Property taxes and home buyer’s fees should also be considered when saving for a home and planning your financial future. Then you have to consider the down payment and closing costs.

That’s why considering house hacking is a great way to offset those costs and turn your first home purchase into a wealth building tool. House hacking is where you buy a multi-unit property, like a single-family home with a mother in law garage unit or a duplex, and rent out one unit while living in the other. You can sometimes pay your entire mortgage with your tenant’s rent and save your money for your next home purchase.

Typically, investing your money is better than trying to pay off your mortgage quickly. There’s a lot to know before you decide to become a homeowner – there are many things you need to consider beyond your expenses. Read my post on how to know whether or not you’re ready to purchase a home.

That wraps it up for 4 of the main financial goals to achieve. By now, you should have a good grasp of the framework needed to tick each of these goals off the list. Now go out and plan your money!