What Are Your Financial Goals?
Financial goals give you direction.
A core financial goal many have is "financial independence"
This term means different things to different people. The dictionary definition of financial independence is "the ability not to work, while having enough income to cover your basic necessities or desired spending. This ability to have an income stream without having to work normally arises when you have assets that provide you an income, i.e a house that provides rental income and has no mortgage remaining on it or stocks and shares that either provide a dividend (period payment), or can be sold for more than they are purchased for."
My Financial Goal
Many see financial independence as getting out of debt. For other's financial independence is early retirement.
Personally, financial independence to me means balance. I enjoy my job, and, despite being Scottish, I’m not frugal. I'd like to retire a bit earlier, but I also want to make sure I have fun along the way. Making sure that “future me” is looked after, while having fun along the way is essential to me.
Financial goals tend to centre on saving enough money to go on holiday, buy a car, or invest in a wedding. I love a nice holiday but please think about “future you”.
I’ll go into it in more detail later but remember this; state pension is only just over £8k a year...can you really live on that? I can’t.
Goals that build in some holiday money, but also savings for “future me” are fundamental.
In my financial workout we'll access goals. Some ideas include:
- If you have debt, paying off a third of that by the end of the year could be a realistic goal,
- Putting £10 a month into a pension scheme
- Switching credit cards to get a lower interest rate
- Getting the cheapest broadband provider for you
What is your definition of financial independence?
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