Defining Your Dreams & Creating Your Financial Goals

Imagine that when you turn 18, you get your very own giant bowl of candy. It has all of your favorites: savory chocolates, sour and sweet gummy bears, or chewy caramels; however, this is all of the candy you can have throughout your lifetime. Some folks might carefully plan to eat just a few pieces a year, while others may consume all their candy in the first few years, not leaving any for them to enjoy later. Some folks may even save all of their candy for when they get older, enjoying all their sweet rewards later in life. 

Your financial goals are similar to the bowl of candy. You can live luxuriously now, living above your means, only to have little to nothing left when you retire. You can steadily save, enjoying little splurges along the way, while also working towards your financial goals. Or, depending on your dreams, you can save your extra funds for retirement, investments, and more. 

Whether you want to drastically change your lifestyle, move to your dream location, or have a luxurious retirement, there are a number of ways you can begin planning for your financial goals and dreams. 

Improve your financial fitness. 

One way to get started on the track to accomplishing your goals and dreams is to improve your financial fitness. Your financial fitness is your ability to manage your money to meet your current needs and long-term goals. While we'll get into our long-term goals a little later, financial fitness starts with daily and monthly habits. Are you able to pay all of your monthly bills and do you typically know where your money is going? How much credit card debt do you have, or are you able to pay it off each month? Do you have a monthly budget that you stick to, including contributing towards your savings and retirement?

Improving your financial fitness can make planning for your long-term goals easier and more effective. Download our free Financial Fitness Checklist to evaluate your financial fitness level so you can begin developing your own healthy financial fitness routine. 

Save an emergency, or "rainy day" fund. 

Once we have evaluated our financial fitness, we should also consider our “rainy-day” funds. Being prepared for the unknown — such as your car breaking down, unplanned medical expenses, or loss of a job — means having significant cash reserves to cover whatever challenges may be in store for us. So, how much is enough? $2,000? $5,000?... more? Rather than pulling a number from thin air, reference the annual budget you’ve just created! Conservative estimates say having enough emergency cash on hand to cover 6 to 12 months of essential expenses is a great way to weather whatever storms may come. If this seems daunting, start the year with a goal of reaching 3 to 6 months’ worth of savings, and revisit your position next year. As your annual budget changes, so should your emergency savings.

Find yourself a Financial Advisor. 

Your financial advisor acts as a guide to help you navigate life's financial challenges, recommends the best, well-rounded financial decisions for your long-term goals, and advises you along the way. Finding your financial advisor as soon as possible can reassure you that you're making the best financial decisions for yourself, your family, and your dreams. 

Review your retirement accounts. 

The inflation we all experienced in 2023 affected more than just our weekly budgets and the price of milk. If you have a retirement account, you’ll find that your annual contribution limits have gone up for 2024. For those of us utilizing an IRA, annual limits for 2024 have been set at $7,000. If you’re over 50, you can make catch-up contributions totaling $8,000. Limits are also up for 401k’s, 403b’s, and most 457 plans. Participants in these plans will be able to contribute $23,000 in 2024, while participants over 50 can contribute up to $30,500. If you can afford to, pay yourself first, and max out those contribution limits.

Review or create an estate plan. 

If you’ve had the chance to create an estate plan, then you understand the intricacies involved. Changes in circumstances over time can affect these plans and how they’re executed. Reviewing the need for potential changes to your estate plan should be done annually with your advisor. If you don’t have an estate plan, schedule time with your advisor to evaluate your situation and needs.

Ready to get on the right track with your financial health and future dreams and goals? Click the image below to download our free Financial Fitness Checklist and your financial health on track today! 

Derek M. Oxford | CFP®, AEP®
Financial Advisor