Superannuation is a crucial part of Australia's retirement savings system, designed to provide financial security…
With the dawn of a new year typically comes forming your new year’s resolutions. This often involves personal goals you wish to achieve in the next 12 months. But aside from individual achievements, you should also consider where you want to be financially by the end of the year. So, it may be a great idea to view some of these financial goals for 2024.
10 Personal Financial Goal Examples
Why Should You Set Personal Financial Goals?
Personal financial goals are essential for building wealth, staying motivated, and achieving a secure financial future. Setting personal financial goals is important for several reasons:
- Direction and Purpose: Setting financial goals provides a sense of direction and purpose, helping you prioritise saving and investing for specific milestones.
- Wealth Building: It is an effective way to build wealth and can lead to a secure financial future.
- Motivation and Discipline: Financial goals act as a motivator, inspiring you and helping you to envision a better future. They also encourage discipline and help you stay focused.
- Clarity and Planning: They give you clarity and direction, allowing you to plan your steps accordingly.
- Measurable Progress: By setting financial goals, you can track your progress and celebrate the achievement of each milestone, which can increase motivation and drive.
- Financial Well-Being: Setting financial goals is the first step towards significantly increasing your financial well-being.
- Risk Management: It can help you prepare for unexpected financial crises by building an emergency fund and paying off unwanted debt.
Personal financial goals provide a roadmap for your financial journey and help you make informed decisions about saving, investing, and spending.
10 Personal Financial Goal Examples
Working towards financial stability involves setting clear and achievable personal financial goals. Whether you’re aiming to overcome debt, build an emergency fund, or plan for a comfortable retirement, defining these objectives provides a roadmap for your financial well-being. In this guide, we’ll explore 10 personal financial goal examples that cover a range of financial aspirations to help you attain financial success and build a foundation for a fulfilling life.
1. Stay Within a Budget
It’s been said that those who fail to plan, plan to fail. This is true for your finances. To prevent running running a cash deficit, being on a well-considered budget is necessary.
When creating a budget, it’s essential to differentiate between needs and wants. Take a look at your financial goals for the year and try to funds those goals with the money you have left after paying for your monthly expenses. Once you’ve taken care of your needs, you can then focus on some of your wants.
2. Get Out of Debt
Paying off your debts is one of the most important financial goals you can set. It’s best to pay off your balances in full as soon as you can, as opposed to carrying a credit that can accrue interest charges on top of what you already owe.
You may be tempted to use your credit card for all your purchases, but this can quickly lead to unmanageable debt if you are not disciplined in repaying the balance before you incur interest. Try to avoid credit cards altogether where possible. If you must use them, only use them in the case of an emergency, and make it a goal to pay those cards off before the month ends.
3. Emergency Fund Building
The importance of having an emergency fund lies in its ability to provide a financial safety net during unexpected events, such as job loss, medical emergencies, or major household repairs. Emergency funds help individuals avoid relying on credit or loans, which can lead to debt due to interest and fees.
To establish or strengthen this financial safety net, it is recommended to follow these steps:
- Determine the Amount: Assess your situation and consider the most common ad hoc expenses you’ve had in the past to set a goal for the emergency fund amount.
- Start Saving: Even a small amount set aside regularly can provide financial security. Set a monthly savings goal to work towards building the fund over time.
- Choose the Right Account: Ideally, put your emergency fund in a savings account with a high interest rate and easy access, separate from your daily bank account.
- Calculate and Set Monthly Goals: Use an emergency savings calculator to determine the total amount needed and set achievable monthly savings goals to make progress.
4. Save for Retirement
Financial goals for 2024 should also typically include saving up for your retirement. One great way to make it easier to build your retirement nest egg is to start saving early. If you’re in your twenties or thirties, it’s never too early to start saving for retirement. You can learn more about saving for retirement here.
5. Start Investing
Investing your money makes more sense than keeping it in a low-interest bank account where the real value may be eroded by inflation.
By establishing a well-diversified investment portfolio with your long-term savings, you create the potential to earn a greater return than the basic cash rate offered by banks and financial institutions.
If you’re unsure where to start, firstly take the time to educate yourself on investment basics and also seek professional advice. Once you feel comfortable with the basics and build a modest investment balance, you can move into more advanced investment strategies.
6. Invest in Health Insurance
Investing in health insurance can be significant because it protects individuals from unexpected and high medical costs. Health insurance covers essential health benefits critical to maintaining health and treating illnesses.
It also offers many other important benefits, such as potentially shorter waiting times for elective procedures, access to certain hospitals or specialists, or even getting free preventive care, such as an teeth cleaning.
Furthermore, you could benefit from government incentives such as the private health insurance rebate and the Medicare Levy Surcharge.
7. Saving for a Significant Purchase
When saving for a big ticket purchase such as a new car or a home deposit you’re looking at a mid-term goal. Mid-term financial goals are typically things you want to save for over a period of several years.
Identifying a mid-term financial goal is important when saving for a major purchase because it helps you determine how much money you need to save and how long it will take to achieve your goal.
Mid-term goals help you prioritise your financial efforts and allocate resources effectively. By defining your mid-term goals, you can focus on what’s most important to you and avoid getting sidetracked by less significant expenses.
Note that mid-term goals usually involve moderate risk, meaning you may face some uncertainty or fluctuations in your income, expenses, or returns whilst you work towards this goal. By identifying these goals, you can better manage the risks associated with them and make informed decisions about your finances.
8. Travel Fund
Budgeting for travel is important because it helps you plan and manage this popular and typically big ticket recurring expense. Having a budget ensures you can afford your chosen holidays and enjoy your desired lifestyle without worrying about overspending or going into debt.
To allocate funds for travel experiences and budget for memorable trips, follow these steps:
- Determine your travel goals: Identify your desired destinations, activities, and duration of the trip based on your interests and preferences.
- Estimate your travel income and expenses: Research the costs associated with transportation, accommodation, food, activities, and miscellaneous expenses for your trip.
- Allocate and prioritise your budget: Divide your travel budget into categories and allocate funds accordingly. For example, you might decide to spend 40% of your travel budget on accommodation, 20% on transportation, 20% on food, 10% on activities, and 10% on miscellaneous expenses.
- Create a detailed itinerary: Plan your activities and excursions in advance, and allocate budget accordingly. Consider mixing free and paid activities to balance enjoyment and cost.
- Track your daily spending: While travelling, keep track of your expenses and compare them to your budget to avoid overspending. You can use a daily or weekly limit for each category, depending on your preference.
- Adjust on the fly: If you find that your spending is different from your budget, make adjustments as needed to stay within your allocated funds.
9. Save up for Personal Education
Saving for education in Australia can be influenced by various factors, such as education costs at each level and inflation. Education costs include university or TAFE tuition fees, textbooks, technology, just to name a few. Inflation is also a significant factor, as education expenses tend to increase over time.
Knowing these, it is crucial to save for education early and have a plan. There are several financial plans available for tertiary education that can help you save and finance your or your child’s education. Some of these options include:
- High-interest savings accounts or term deposits: These accounts can provide a higher return on your savings, allowing you to save more money for your child’s education.
- Education bonds: These are tax-free investments that can provide a steady return and help you save for your child’s education.
- Offset accounts: These accounts are linked to your mortgage and can help you save on interest payments rather than accrue interest in a savings account, allowing you to save more money for your child’s education.
- Managed funds portfolios: These investment vehicles can provide diversification and professional management, potentially leading to better returns for your child’s education savings.
For much older children or for yourself, you can consider these additional options:
- Scholarships and financial aid: Look for scholarships and financial aid opportunities that can help reduce the cost of studying in Australia. Many universities and colleges offer scholarships and financial assistance programs to support international students.
- Part-time work: Encourage your child to find part-time work to help cover their living expenses and contribute to their education savings.
- Employer Subsidy: If you are employed in the industry you wish to study in, consider presenting your employer with a professional development study proposal. Many students often collaborate with their employers to share the costs associated with such opportunities.
- Credit for Past Education or Experience: Do you possess a background in studying or working within a related field? Gain acknowledgment for your experience through course credit points, which can decrease the required number of units for study and subsequently reduce your overall tuition costs.
- Fee-Free Courses: Some government technical colleges, such as TAFE, will offer a limited number of courses, for a limited period of time, at a discounted rate or free.
By exploring these financial plans and working closely with a financial adviser, you can effectively plan and prepare for your or your child’s college education.
10. Become Financially Educated
You can’t become a millionaire without first understanding how to manage your money. If you want your finances to grow, you must first learn to manage your money; and the best way to achieve that is to educate yourself on how to handle the money you earn throughout your lifetime.
Start by reading personal finance articles about your field of interest. Find out which books are out there that cover the topics you’re interested in or listen to podcasts by other successful people – what highly effective habits of theirs can you adopt in your own life?
Also, you can seek the guidance and support of a qualified financial adviser who can help you establish a financial plan and coach you throughout your relationship.
Your financial goals for 2024 don’t have to be overly complex. Prioritise a few financial goals that are key to your growth and success, and start working towards achieving them. By setting these goals now, you’ll have a checklist to follow in the future.
Get solid financial advice in Newcastle from Newcastle Financial Planning Group. Our team of advisers has decades of collective experience in financial planning to support couples, families, professionals, and retirees achieve the lifestyle they seek, simplifying the burden of managing your financial affairs.
Want to learn more tips to retire with peace of mind? Check out these interesting blogs!
- How to Prepare for Retirement: A Quick Beginner’s Guide
- 11 Crucial Questions to Ask Your Financial Advisor
- What You Should Know About Developing a Retirement Savings Plan
DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.