Terra Cotta Financial Group Explains How to Set Financial Goals for a Prosperous Future

Everyone should have financial goals for their future. Many people have goals related to growing their wealth, retiring comfortably, or putting their children through college. These goals can be complemented by a range of other ambitions, giving you a strong framework for your financial future.

If you do not set goals for yourself, you may risk being unable to meet your financial obligations later in life. Putting in the time and effort now while you have the funds to plan for future events can be a huge help later in life.

Terra Cotta Financial Group explains the best ways to set financial goals, drawing in your priorities to make sure that you will meet your future needs in a timely fashion.

Decide on Your Endgame

The first thing that you should do to set financial goals is to decide where you want to be many years down the road. You will need to look honestly at your current situation to set realistic goals. If you know for sure that you will have certain expenses in the future, like college or supporting an elderly parent, you will need to plan for them now and in the long term.

Create a Budget

One of the most important things you can do when planning your financial goals is to set a budget for yourself. Without a budget, you will be spending money without a plan for using it in the future. Here are several points you should keep in mind when setting a monthly budget for yourself.

Minimize Unnecessary Expenses

A good rule of thumb is to spend 50 percent of your income on needs, 30 percent on wants, and 20 percent on savings or paying down debt. You should consider trimming your budget by eliminating unnecessary expenses like premium cable television, expensive car payments or leases, too much takeout or too many dinners out, and discretionary purchases. Bringing your lunch to work each day could save you as much as $300 per month, which could be used for more important expenses.

While you are trimming your budget, make sure to leave some room for fun. Taking away all of your enjoyment will only make you more likely to throw yourself into impulse spending when you are feeling stressed.

Save for an Emergency Fund

Everyone should have an emergency fund for expenses that can’t be predicted. Ideally, it should cover six months of paychecks. This amount could be intimidating, especially for people living paycheck to paycheck, but it could be the difference between financial success and failure. Prioritize saving for your emergency fund, and you will feel better when problems arise.

Pay Off Debts

Paying off high-interest credit card debt and student loans should be another high priority on your list of financial goals. If you are only paying the minimum on your credit cards, you will be running up outrageous amounts of interest each month that may cut into your capability to pay off the premium.

Many people recommend the snowball method of paying off debt, where you start paying your smallest debt first regardless of the interest rate. When you have paid off an entire credit card, you will feel motivated to work on the rest.

Become Properly Insured

Especially if you have a family with children, you should prioritize spending money on life insurance. Life insurance can be a lifeline for your family in the event of the death of one or both parents. It could enable your family to keep their home, send children to college, and gain financial stability while the surviving spouse is looking for ways to support the entire family on their own.

Contribute the Maximum to Retirement Accounts

Terra Cotta Financial Group believes that you should contribute the maximum amount to your retirement accounts each month. This means that your money will have the chance to multiply and give you a livable budget when you have reached retirement age.

Look at Short- and Long-Term Goals

You need to consider your short-term goals like those we discussed when building your budget and your long-term goals when planning your financial future. Having a plan to cope with the possible problems that you may encounter in the course of your life will set your mind at ease and help you learn to live without constant worry about your finances.

Planning for a Prosperous Future

Setting financial goals is character-building and teaches you how to live simply as you save your money for future expenses or paying off debt. It can help you decide on your top priorities and arrange your financial life in line with what you want your future to look like.

Terra Cotta Financial Group believes that the best way to make financial goals is to sit down with a certified financial planner. Certified financial planners can analyze your situation and tell you what your priorities should be. Together with your certified financial planner, you will be able to set up goals that will ensure your family's safety and financial health.

This article does not necessarily reflect the opinions of the editors or the management of EconoTimes