The Importance of Financial Goals

There are different levels of financial goals. There are short, mid, and long term goals. Each one of these has a very important role in your life. Without set goals, you could find yourself overspending on things that might not be beneficial for your bank account. This situation is a slippery slope which means that it could, later on, lead to your own financial crisis. Don’t allow excess spending and poor planning take you down a path of debt. Especially, stay away from credit card debt. My “Abuelita” constantly tells me that it’s better to be temporarily without money than to let your credit score be affected negatively. Credit Score is a topic to be talked about later, but just know it will affect decisions for the rest of your life. 

The first step for all three goals starts with budgeting. One should set priorities with a level of importance. Personally, I place my bills as the most important priority. This may include rent, insurance, car payments, and credit card balances. Anything that may affect your credit score, PAY FIRST! Then, I take out a percentage of my paycheck and place it on my savings account. What most people do is 10%, if possible I recommend MORE. 

Within the short term goals what I do, as mentioned above. I pay my bills and continue to pay off my student debt. Then my objective is to create an emergency fund that would allow me to be stable for at least 4 to 6 months without a job (minimum). This allows you to prepare for any unseeable circumstances. The last thing you want to happen is to get fired from your job, and not being able to pay your bills, which will lead to a sum of debt and consequently affect your credit score. 

Mid-term financial goals could include specific, yet very pinnacle moments in your life. Does anything come to mind? How about a house? What about a potential engagement ring? These are things that at your late teen’s or maybe early twenties, might not come to mind. Yet, it is an extremely good idea to save for these things, even if you don’t have a partner, or don’t even plan to buy a house just yet. Life happens without warnings, and the best thing we can do is to prepare for any situation that might come our way. Also, hopefully by the time you decide to place a down payment for a house, you have already finished paying any type of debt that has been lingering for the past few years. 

Being the young professional that I am, I haven’t begun saving for my long-term financial goals. Yet, it’s something that I will do once I reached my emergency fund goals. One of the most common practices for saving towards retirement is the 401k. The 401k is a retirement plan that all employers are obligated by law to enroll their employees in. You can opt-out and decide not to save with that plan, but it is recommended you take the opportunity to start saving. Honestly, why wouldn’t you? The 401k plan allows you to save and invest a chunk from your paycheck before taxes. Allowing you to build a cushion of comfort for when you are ready to hang the gloves and enjoy your earnings. There is actually a 401k calculator that helps you measure how aggressive or passive you should be saving for your desired retirement goals. This is not the only plan there is available for retirement but it is the one I am most familiar with. I do know there is also a Roth IRA plan that is beneficial when regarding taxes.

Edwin A. Rodriguez,
Founder of Financial Tenacity


I would appreciate if our readers or guest authors would comment on other ways and systems on doing this. Please don’t hesitate to comment below and add your advice. An elaboration of the 401k and Roth IRA is greatly welcomed. 

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