6 Financial Goals
Setting goals can motivate you to save money or spend it wisely. Financial goals come in two types:
Short-Term Goals: These are things you want to accomplish in the next few months or a year. Examples include saving for a new phone, going on a trip, or building an emergency fund.
- Example: You might set a goal to save $300 in 3 months for a spring break trip.
Long-Term Goals: These are goals that take a year or more to achieve. Examples include saving for a car, paying off a student loan, or building long-term savings.
- Example: You might want to save $5,000 over the next 3 years to buy a used car.
How to Set Financial Goals:
- Decide on Your Goal: Think about something you need or want, like a new laptop or paying off credit card debt.
- Break it Down: If your goal is to save $600 in 6 months, break it down into smaller goals. You would need to save $100 per month to reach your goal.
- Track Your Progress: Keep track of how much you’ve saved toward your goal and adjust your budget if needed.
Emergency Fund
An emergency fund is a savings account that you only use for unexpected expenses, like car repairs, medical bills, or replacing a broken phone. It’s important to build an emergency fund so you don’t have to rely on credit cards or loans when something unexpected happens.
How Much Should You Save?
- Financial experts recommend saving 3 to 6 monthsworth of living expenses. However, as a student, even $500 to $1,000 can be a good starting point.
- Example: If your living expenses are $800 per month, aim to save at least $2,400 as a safety net over time.
When to Use an Emergency Fund
Car Trouble: If your car breaks down and costs $200 to fix, you can use your emergency fund instead of putting it on a credit card.
Medical Bills: If you get sick and need to pay a $100 medical bill, your emergency fund can help cover it.
When Not to Use It
Vacations or New Clothes: Your emergency fund should only be used for true emergencies, not for things like trips, dining out, or impulse buys.
