Your Guide To Financial Goals

Your money might have a to-do list a mile long: pay off debt, save for retirement, build an emergency fund, cover gas and groceries.... And that's before you've even gotten to what you want to do with your cash (think: vacations, dinners out, upgraded computers). With so many jobs to do, it can be hard to tell exactly which should come first. Here's our framework for how to create, prioritize, and then tackle your financial goals.

2. Make a budget

Fidelity Smart Money

Financial goal examples & roadmap

Saving for 1 financial goal by itself may not feel hard. The trouble is you probably never have just 1 goal competing for your money's attention. Here are some of the most important financial goals to put on your radar and how to attack them.

1. Understand your finances

It sounds basic—just getting a grasp on the actual numbers involved in your financial situation. And yet, when was the last time you pored over your paystubs and monthly account statements? You have to know what you have coming in and going out each month before you can optimize reaching bigger financial goals.

To reach your financial goals, you'll have to make sure you're spending less than you make, and one of the easiest ways to do that is to make a budget. A good place to start is with the 50/15/5 framework, where you allocate 50% of your monthly take-home pay to essentials, 15% of your pre-tax income to retirement savings, and 5% of take-home pay to short-term savings or emergency savings. The rest? It's up to you and your financial goals..

3. Maintain minimum insurance coverage

Insurance helps protect you from life's whatifs. Ensuring you have enough coverage should be a high priority as you create your financial roadmap. So, opt into the health, life, and disability plans available to you. These types of insurance are often easier (and cheaper) to get through employers, and while they're a crucial part of any financial plan, they're especially vital if you don't have enough emergency savings to cover the types of catastrophic events they protect against.

5. Fund medical expenses/pre-tax dollars flexible spending accounts (FSAs) let you pay for eligible medical expenses with pre-tax dollars, effectively raising the value of your medical dollar by whatever your current income tax rate is. Which of the two accounts you're eligible for depends on your health plan only those with HSA-compatible high-deductible health plans (HDHPs) can contribute to HSAs; those in other plans and those who opt out of HSAs can contribute to FSAs. Because these accounts are such valuable tools, you may eventually want to contribute up to their max.

5. Begin building an emergency savings

If you don't have any emergency savings yet, work on this goal next. Like insurance, it's part of the financial safety net you should prioritize building to protect yourself from life's surprises. A helpful first goal is to stash $1,000 or the equivalent of one month of essential expenses.

6. Get your 401(k) match

When you're trying to make ends meet, saving for retirement might not be a top priority. But if you have access to a workplace retirement plan and any sort of employer match don't miss out on an easy way to instantly increase your investment.

7. Pay down credit card debt

With interest rates around 20%, credit card debt is some of the most expensive debt out there. It's roughly 4 times the going rate for federal subsidized student loans.* Make sure you're at least covering your monthly minimum payment but work toward paying more than that every month until you've zeroed out what you owe.

8. Save for something special

Saving for certain goals can seem like eating your financial vegetables. While it's important to plan for retirement, it's also helpful to include moments of more instant gratification. Maybe you want to go on a big anniversary trip or plan a reunion. Work to find ways to include these fun goals through the various pitstops on your financial goal roadmap to reward yourself.

9. Flesh out your emergency fund

While $1,000 or a month's worth of essential expenses is a great place to start, it may not be enough to completely shield you from an unexpected turn of events, such as a layoff. That's why as soon as you can, you should work to save 3 to 6 months' worth of essential expenses. And don't forget: You should prioritize replenishing your emergency account after you've tapped it.

10. Pay down other high-interest debt

Not all debt is created equal. How you prioritize paying it off often depends on the interest rate. Fidelity recommends targeting paying off debts with interest rates of more than 6% as soon as you can. It may seem counterintuitive not to chip away at all of your debt, but money you'd spend getting ahead on lower-interest-rate debt may be better spent on investments that historically have returned more than 6% each year on average.

Automate your contributions

Nobody wants the headache of having to ferry their cash between their various accounts. Instead, set up automatic contributions from your paycheck or recurring transfers from a main checking account to other goal-based accounts. The less you have to think about, the easier it is to save.