Money Monday: Setting Achievable Financial Goals

 

Setting achievable financial goals is an indispensable fundamental if you’re ever going to experience financial freedom! What are financial goals anyway? Simply put, financial goals are those targets you set for investing, debt, saving, giving, and or spending. How do you set financial goals? One approach is to ask the question, how do you define success? Another determinative factor may be the stage you are in your life’s journey. Are you closer to retirement or just starting a family? Wherever you are on the continuum of life, setting financial goals and developing a plan to execute those goals must be part of your plan for 2022. Let’s get started!

 

Where to Begin?

I don’t want you to overthink this, but somehow it seems inexplicable to me to establish financial goals without contemplating your values. Think about what financial goals you wish to accomplish and why you want to achieve those goals. Attaching reasons to your goals can power your motivation and give perspective. For example, paying off those credit card Christmas shopping debts will allow available money for this summer’s vacation to the Caribbean or another destination on your bucket list. Now that sounds like fun! While you may start with big dreams, it’s essential to calculate what those goals will cost in real dollars. By that, I mean not just the cost today, but in real inflationary dollars and cents. Quantifying your financial goals forces you to face reality. Sure, you want a bigger house or to relocate, but with the price of homes being overvalued in the market and the cost of borrowing about to increase, is that financial goal achievable?

 

Game Plan

Your financial goals should be structured into at least three categories, short-term, intermediate, and long-term. You must also determine the priority order of your financial goals.  In establishing financial goals, you must account for each category at the beginning of planning financial goals.  It reminds me of planning when I was a ministry leader at my church. I never understood why leaders would never plan for the entire term they were elected to serve while in office – say two years or more, but they were figuring out a plan for that year each new year. My approach was always to plan for my entire two years of service upon acceptance of the position. The plan would spell out which goals I wanted to accomplish in year one, let’s say the first quarter,  and which ones I wanted to achieve in year two of my administration, fourth quarter. Those plans were developed from inception. . In other words, I had a short, intermediate, and long-term stewardship plan from the beginning of my time in leadership. I did not operate in silos. I did not wait until yer one was over to figure out what plan I would make for year two. So it is with your financial goals. You must plan goals perhaps for the next 3-5 years, then 5-10 or 5-15 years, and then 15 years and beyond. You can’t wait until you have completed your short-term goals to figure out your intermediate goals. Yes, goals may be adjusted and revised as circumstances or situations change, but you are working from a plan.   Those suggested timeframes are influenced by your age, how long you plan to work, and the age of your children.

 

Goal Cost

Now that you have identified categories and priorities, what will these goals cost? A simple example of this is if your financial plan is to purchase a house after one year with a deposit of $15,000.00, then you need to start saving $1,250.00 each month towards your goal. You’ll get tired of me saying this, but it bears repeating,  and that is, your $15,000.00 deposit goal needs to account for inflation. It’s a pretty safe bet to say that any financial goal more than one or two years away will have to account for inflation. If you struggle with prioritizing your financial goals, say between your retirement and funding your kids’ college education, give this some thought. Your children can acquire a loan to pay for their college education, but no one will provide you with a loan to fund for your retirement.

 

WHAT’S UP!

Today’s what’s up are about contribution limits and saving money.  Thanks to your most beloved uncle-  Sam (IRS), you can put a little bit more of your money away for retirement in 2022. When it comes to your IRA ( Individual Retirement Account- including Roth IRA),  your maximum contribution amount is $6.000.00. However, if you are age 50 or older, you can contribute an additional $1,000.00.To contribute the maximum amount, your modified adjusted gross income (MAGI) must be less than $129,000.00 if single or less than the $204,000.00 if married filing jointly.
 
When it comes to your employer-sponsored retirement plans, also known as 401(K), your maximum contribution is $20,500. However, if you are age 50 or older, you can contribute an additional catch-up contribution of $6,500.00 to your employer-sponsored retirement plan. And that’s what’s up!
 
Ruthven R. Phillip, Esq., is a tax attorney, Stewardship and Philanthropy Ministry Assistant, and CEO of Give2Getrich, LLC. Give2Get Rich, LLC 2022. All Rights Reserved. Any distribution or reproduction of part or all of the contents in any form is prohibited.
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