Introduction to How to Set and Achieve Financial Goals

Financial goals, such as buying a home or saving for retirement, are achievable but requires a certain amount of dedication, knowledge, and planning. It can be hard to envision a goal and even harder to work through it. An individual’s financial plan should be tailored to the individual and to their goals, however, there are still fundamental principles to understand and employ when setting up this plan. In this article, we will provide insight into the important elements to setting and achieving financial goals such as buying a home and saving for retirement.

Create a Financial Plan

Creating a financial plan is the first step when working towards a big financial goal like buying a house or investing for retirement. A financial plan should be tailored to the individual’s particular circumstances and goals. When creating a plan, one should consider the following:

• Establish Financial Goals – create a clear vision of what you want to achieve and set a timeline for achieving those goals.
• Assess Your Current Financial Situation – Examine your current finances to determine what you can afford, what you owe, your income and expenses, and your overall financial health.
• Create a Budget – Create a budget to help you better manage your expenses and maximize your savings.
• Create an Investment Plan – Create an investment plan that leverages the different types of investments available, such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), and real estate investments.
• Manage Debt – Establish a debt management plan to eliminate your debt and improve your credit score.
• Stay Committed – Stay committed to your plan and the goals it will help you achieve.

Saving for Retirement

Saving for retirement is an important element of a financial plan, ensuring you have a reliable source of income after you retire. When creating or adjusting a plan for retirement savings, the following should be taken into account:

• Understand Your Retirement Goals – Consider how long retirement may last and how much money you’ll need.
• Consider Available Retirement Plans – Consider retirement plans such as 401ks, IRA plans and Roth IRAs, which all offer different advantages and drawbacks.
• Determine How Much to Contribute – Calculate how much you need to contribute to reach your retirement goal by your target age.
• Invest Wisely – Diversify your investments to maximize returns and minimize risk.
• Stay Committed – Remain committed to your plan and review it periodically to ensure you are still on track.

Buying a Home

Buying a home is a major milestone and a commitment of both time and money. When buying a home, the following should be taken into account:

• Assess Your Current Financial Situation – Consider your current finances to determine how much you can afford.
• Request a Pre-Approved Loan or Mortgage – Obtaining a pre-approved loan or mortgage helps determine the maximum amount of loan you can receive and obtain better interest rates.
• Find a Real Estate Agent – A real estate agent can help you find the right property and negotiate the best rates.
• Understand All Costs Involved – Consider closing costs, taxes, and insurance in addition to the cost of the home.
• Make an Offer – Make an offer on the home with the help of your real estate agent.
• Secure Your Mortgage – Choose the best mortgage which fits your financial circumstances and provides the lowest interest rate.
• Sign Documents – Sign all the paperwork for the purchase of your home.
• Settlement Day – Enjoy your new home!

Next Steps

The following are further steps that could be taken to further your understanding of how to set and achieve financial goals:

• Head to financial seminars and webinars.
• Check out books and financial magazines to learn more about investing, money management, and the right strategies when it comes to financial planning.
• Speak with a financial advisor or planner.
• Research and become familiar with financial blogs and podcasts.
• Teach yourself more about personal finance and stay up-to-date on current events related to money and investing.

Resource section

• Financial Planning software – There are many free or paid financial planning software tools available. The financial plan allows individuals to track and manage their finances, plan for the future with investments and create a budget.
• Savings apps – Savings apps like Digit, Qapital, and Acorn help people automate their savings to ensure they are able to save and reach their goals.
• Investment websites – Investment websites like Betterment, Wealthfront, and Motif Investing provide users with access to the tools and resources to help set and manage their investments.

Websites:

• mint.com: Track Your Spending, Manage Your Money, and Start Saving Today
• The Simple Dollar: Helping You Win With Money
• Investopedia: Sharper Insight. Smarter Investing

How much money do you need to save for a down payment on a house?

The amount of money you will need for a down payment on a house varies depending on a variety of factors, such as your market, credit score, loan program, type of house, and other factors. Generally speaking, you should plan to save at least 5 percent to 20 percent of the home’s total purchase price for the down payment. For example, if you are buying a $250,000 house, your down payment could be anywhere from $12,500 to $50,000.

How much should I save for a down payment on a house?

The amount you should save for a down payment on a house will depend on a few factors, including the type of loan you’re looking for, your credit score, and the total price of the home. Generally, most buyers aim to save between 3.5% and 20% of the home’s purchase price for a down payment. That means if you’re buying a $200,000 home, you’ll need to save between $7,000 and $40,000.

If you qualify for a loan program that requires a lower down payment, then you may be able to get away with a smaller savings goal.

However, if you are able, it’s always a good idea to save a larger down payment—often 20 percent, or the maximum amount you can afford—to lower your loan costs and keep your monthly payments affordable.