10 money targets worth shooting for
Want to whip your finances into shape, but not sure what to aim for? Here are 10 goals to set your sights on.
1. An emergency fund
Sudden loss of income is the No1 cause of bankruptcy. It can take a while to get back on your feet after receiving the dreaded ‘‘don’t come Monday’’, so it’s crucial to have enough money stashed away to cover at least three months of expenses.
2. PROTECT YOUR NECK
An emergency fund isn’t going to save you from a full-blown catastrophe, which is where insurance comes in. Any valuable assets – house, car, possibly your income – should be protected. Even if you don’t own anything worth enough to insure, you still need to consider liability protection in case you burn the landlord’s house down or prang someone’s posh car.
3. MAKE AN ACTIVE CHOICE ABOUT KIWISAVER
Failing to move out of the default low-risk fund you were assigned to could be a $250,000 mistake. It’s crucial to take on the right amount of risk to suit your investment time frame, and to look carefully at fees, which can also make a big differencet.
4. SET A CLEAR SAVINGS GOAL
It’s pretty hard to focus on saving unless you set a specific goal, and link it to something you’re passionate about – a holiday, a house deposit, starting a business, early retirement.
5. CREATE A TRACKING SYSTEM
A goal is only useful if you have some way of measuring progress. It doesn’t matter if it’s a spreadsheet or a simple piece of paper, as long as you stick to it. And check in at regular intervals, so you can up your game if you’re falling behind.
6. BECOME WORTHLESS
Having a net worth of zero dollars is actually worth celebrating, because most people owe more than they own. I was in the red the first time I figured out my number, which gave me extra motivation to tackle my debts and start saving aggressively.
7. OWNA HOME
Some people prefer the flexibility of renting, but this is definitely a great goal. A mortgage works as a sort of forced savings plan that keeps you steadily building up your assets, and home-ownership is one of the most important factors in a comfy retirement.
8. DEBT FREEDOM
No unpaid credit cards, no student loans, no overdraft, no mortgage...
9. F... YOU, MONEY
Once you have a degree of financial independence, you can start living life on your own terms. That might mean walking away from a dodgy job, telling a horrible boss where to stick it, or not having to compromise on things that are important to you.
10. A MILLION BUCKS
Seven figures isn’t quite what it used to be, but, as Larry David would say, it’s pretty, pretty, pretty good. New Zealand’s millionaires club is still fairly exclusive, at about 3 per cent of the adult population. If you haven’t achieved any of these goals, don’t get discouraged.
The low-hanging fruit on this list could be ticked off in less time than it would take to binge-watch a season of your favourite Netflix show, others will take longer and some might not be realistic for everyone.
The important thing is to take that first step down the path. Once you’ve got some little wins under your belt, setting and achieving money goals becomes a habit that will serve you for life. Got a burning money question? Email Budget Buster at richard.meadows@thedeepdish.org, or hit him up on Facebook.