How to set financial goals
Use these financial goals examples to build your personal plan
The main goal of financial planning is to get an understanding of your priorities, keep yourself on track and make progress toward the future you imagine.
And if you’re starting (or continuing) to think about setting financial goals, you’re in good company. In a recent survey1 conducted by the Harris Poll on behalf of Empower Retirement and Personal Capital, Americans indicated they’re increasingly prioritizing investing and securing their financial futures.
Here are five examples of financial goals you may want to focus on — and a financial goals worksheet to help you get started.
- Build an emergency fund.
Financial professionals recommend keeping three to six months’ worth of living expenses in an emergency fund. Aim to accumulate enough to cover items like housing costs, insurance and loan payments — plus money for groceries, your cell phone plan, car maintenance and other essentials should you lose your job or be out of work due to an extended illness or other emergency.
Tip: Use this emergency savings calculator to determine how much money is suggested for your emergency fund.
- Save for retirement.
Many Americans will live a long time after retirement — possibly decades. Maintaining your lifestyle all those years can require a significant nest egg. But tax-advantaged investment accounts like 401(k)s and IRAs can make it easier to hit your financial target. Be sure to understand and take advantage of your employer’s retirement plan: Many companies will match all or part of your contributions, helping you grow your nest egg even more quickly.
Tip: Consider increasing the percentage you contribute to your retirement plan account — it can make a big difference in the long run.
- Pay off personal debt.
How to pay off debt depends on what type of debt you have. Because credit cards often carry high interest rates (18% or more), and issuers are happy to let you pay for that new TV over decades — with interest piling up along the way — it can be a good idea to prioritize paying off credit card debt.
Tip: Once you’re out of the hole, treat credit cards like cash — if you can’t pay the bill within a month, don’t make the charge.
- Invest in the stock market.
Your company’s retirement plan can provide a great way to access the stock market. Many retirement plans make the process of investing easy. For instance, you might be able to invest in a target date fund, which adjusts its investment mix over time and becomes gradually more conservative as you approach retirement.
Tip: Start by learning the basics of investing, and if your retirement plan offers digital tools and professional advice, consider tapping into them for additional support.
- Make a formal plan.
Our research has shown that people who have a formal, written financial plan for retirement are better prepared for retirement2. Making a plan begins with careful recordkeeping so you know where your spending goes and how much progress you’re making toward your goals. It’s also a great way to identify any roadblocks that might be in your way.
Tip: Consider using an app like the one provided by Personal Capital, which puts all your financial information in one place and helps you analyze your spending and saving.
Serious about improving your financial health? Get started right now by downloading our financial goals worksheet.
1 Back to (Financial) Basics: How Americans are responding after an unprecedented 2020.
2 Empower Retirement Institute, Scoring the Progress of Retirement Savers 2020.
Investing involves risk, including possible loss of principal.
Asset allocation and balanced investment options and models are subject to the risks of their underlying investments.
Personal Capital is an affiliate of Empower Retirement.