In this post, we are going to write about 7 financial goals youth should have in life which can help lead to financial freedom and retirement early. One important prerequisite for this process of achieving 7 goals is to be persistent. Most people are very excited at the beginning but cannot keep persistent of doing until it becomes their habit. This is a very important key to achieving things (Not just only financial goals). Keep persistent until it becomes a habit.
The reason why an emergency fund is your first-ever financial goal is that it is your insurance to make sure you have food to eat and a place to sleep for yourself and your family. There are a few conditions you can check for consideration as below
- You should have 3 months period of the emergency fund if you are independent/single
- You should have a 4-5 months period of the emergency fund if you are in a serious relationship or fiance and you are going to get married
- 6 months of the emergency fund if you are dependent (family, kids, and parents)
- 1 year of the emergency fund if you are a business owner
TRACKING NET WORTH
Tracking your net worth is a way to check your financial health so you can keep alive long time. The reason for doing this is to define a tool as a thermometer for your wealth. You can do this periodically by listing assets, liabilities and then calculating your net profit.
PAY OFF BAD DEBT
There are two types of debt, good debt and bad debt which are explained in detail in this article. By paying off your debt you gain the guaranteed rate of return (ROR). The debt which has over 5% of interest is considered a high-interest rate which you should consider paying off before you consider investing.
The reason automating savings is important is because paying yourself first is the easiest way to save money. By dividing the portion of your paycheck to the activities which are significant for yourself is very vital. This habit makes sure you keep money before even spending it. For example, you are a person who likes to travel abroad a lot (Maybe 5 or 6 times a year). Therefore, what you can do is that you automate your banking account to transfer a portion of your money to keep for travel on your paycheck day and keep the remaining for spending.
Investing is a way to keep your purchasing power powerful means that you don't lose the value of your money due to inflation. You can invest in the stock market, cryptocurrency, real estate, etc which are assets that have high value appreciate over time and can beat inflation. The key importance of investing in the diversification of your money.
If you are dependent, you might check out for insurance because it's a way to replace your income in the event of death or your disability to work.
By continuing to educate yourself, you are enabling yourself to learn new knowledge and possibly lead to having satisfaction in life through education. There are many ways you can keep yourself educated these days through online learning, Youtube, reading books, etc. Always crave for knowledge and education.