5 must-have financial goals

Thinking about your financial goals for the near future, it's easy to start daydreaming about the wonderful things you hope to acquire—a well-deserved pay raise or maybe that long-awaited home renovation. But what about financial peace of mind? While hopes and dreams vary from person to person, there are five big financial goals anyone seeking financial well-being should include on their list:

1. Max out your 403(b). One rule of thumb says that by the time you turn 30, you should have the equivalent of your annual salary saved (that's all savings, not just retirement assets); double your salary saved by age 35; three times the amount by age 40, and so on. I know, that may sound a bit on the colossal side. However much you're falling short, don't fret, it's never too late to increase your savings rate—and it never hurts to aim high—as close to the $19,5001 annual limit as you can get. Take full advantage of your employer match, if you have one: With a $50,000 salary from an employer matching up to 6% of your contributions, you'd be turning down $3,000 (free money) each year! Most people's pay consists of a package that includes salary and employer benefits. You wouldn't accept a $3,000 pay cut without a fight; well, letting your employer match go to waste is kind of the same thing. In the absence of an employer plan, contribute to an IRA instead, even though the target is much lower (the annual contribution rate for 2020 is $6,000¹ ).
2. Build an emergency fund. Each year brings economic uncertainty to many and, even for the financially secure, life happens in the form of medical bills, domestic catastrophes and other unplanned expenses. As a general rule, it's good to maintain an emergency fund that would cover three to six months of living expenses in case you find yourself unemployed. Every job sector is different; I have friends who are out of the workforce and it's taking them a while to find something. For them, six months' worth of living expenses is a bit on the inadequate side. Once you've calculated how much you should save, set aside a certain amount from each paycheck to set you on your way. Learn more about how to start your emergency fund.
   
3. Get your financial affairs in order. I've met animal lovers who put more planning into their dog's birthday party than they do planning their estates. No doubt the party was a lot more fun, but estate planning is something you can't afford to postpone for another year. Getting your financial affairs in order, and designating the right people to manage them in the event of your incapacity or death, takes a huge weight off your shoulders. Necessary documents include durable powers of attorney, which designate someone to manage your day-to-day affairs, and a living will or healthcare directive to instruct your doctor what to do if you're unable to make medical decisions for yourself. Don't forget to inform those assigned with the task of handling your estate, who need to know the location of your will and other estate planning documents.
   
4. Give yourself a debt deadline. Bad debts. You know which ones they are: the loan you took out to pay for a wedding; the credit card with the sky-high interest rate whose balance keeps rolling like a New York subway car. Convincing yourself that minimum monthly payments are okay? How about setting a deadline for repayment and getting rid of this exponentially growing interest?
   
5. Create a budget (and stick to it). If you find that your spending is a bit out-of-control, you may want to press the reset button on your out-of-control spending behavior with a budget.
   
   

Remember, a properly set goal is halfway reached. Simply setting these five money goals is enough to start you well on your way toward financial well-being.