Your List of Financial Goals

Building a financial checklist for greater security.


Creating a financial checklist can be one of the first steps toward saving for your future. And while your own aspirations may differ from these financial goals, you can use them for inspiration as you build a checklist that fits your life. Here are some ideas to get you started:

Manage your debt

First up, take stock of what you owe and see if your debt is helping you move forward or holding you back. One way to do this is to think in terms of “good debt” and “bad debt.”

Some examples of good debt might be a low-interest loan used for college tuition, a home loan with manageable monthly payments or even a car loan that enables you to get to work or school. Large expenses like these would simply be out of reach for many people if borrowing money were not an option.

That said, it’s important to only borrow money that you can comfortably pay back. Repaying your debts on time every month not only builds your credit score, it may help you secure lower-interest loans for any future expenses you may have.

Bad debt, on the other hand, can strain your budget and even get in the way of saving money. Take credit cards, for instance. The average interest rate on a new credit card is now 16.71%.1 If you use this type of credit—and don’t pay the balance in full every month—you’ll end up paying quite a bit more than those original price tags in the long run.

Payday loans, which lend you money until your next paycheck, are another financial pitfall to watch out for. While they’re meant to be used short term, fees are often extremely high. A typical two-week payday loan, charging $15 for each $100 you borrow, equals an interest rate of nearly 400 percent! 2

The takeaway here is that not all debt is bad, but that it’s essential to use debt wisely—and mostly for things you can’t cover with cash. Try to aim for low interest rates and payments you can manage, so that debt is working for you, not against you.

Start saving

Today, most Americans aren’t saving enough money every month to cover themselves in an emergency.3 That can feel scary. If you find yourself in this situation, consider opening a savings account, which you can do from virtually anywhere. That way, there will be an account that’s just for saving money. You can even set it up so that a portion of every paycheck gets deposited automatically.

Adding this to your list of financial goals may be one way step toward a more secure future. How much you should sock away depends on your age, how much you can afford and if you’re saving elsewhere. Stockpiling 3 to 6 months’ worth of income is a general rule of thumb,4 but the key is to simply start saving. Even saving a little each week adds up, and doing it automatically makes it that much easier.

Buy a home on your terms

At a certain point, you may find that buying a home makes more sense than renting an apartment. As with any major purchase, there are things to consider. How much can you afford to spend on a home? If you’re not sure, try using a mortgage calculator to see how different down payment amounts and other factors can affect your buying power.

As you begin your home-buying journey, consider adding these tips to your financial checklist:

  • Figure out when you want to buy and how much you want to spend.
  • Aim to save 20% of the purchase price to put toward the down payment.
     

Saving for a down payment can take time and commitment, but a well-laid plan may help you get there. And keep in mind that expenses related to home ownership often go far beyond the mortgage payment. As you save, talk to other homeowners about their experiences. What surprises or hidden expenses have they encountered? From landscaping to painting, it’s good to be prepared for everything life without a landlord may entail.

Plan for your future

Once upon a time, pensions were commonplace. 5 Employees would work for a company for a certain number of years and could generally count on pension payments to carry them through retirement. These days, the percentage of U.S. workers in the private sector whose only retirement account is a pension is down to 4%,5 which means that preparing for retirement is now up to individuals.

Of all the long-term financial goal examples, retirement planning is one that often gets neglected. Unfortunately, there are millions of working-age Americans without retirement assets.6 But saving for retirement is an important practice for anyone working toward long-term financial goals. As you carve out a plan for life after work, here are a few savings options to consider:

401(k): If your employer offers a 401(k) or similar employer-sponsored retirement plan, think about signing up. The money will be invested before income tax is deducted, which means you save on taxes while investing in your future. And if your employer offers a 401(k) with a matching contribution, even better. By donating the maximum amount allowed, you’ll get the maximum amount in matching dollars. Otherwise, you’ll be leaving free money on the table.

IRA: Another option is to invest your money in an IRA or Roth IRA. This will also allow you to gain income tax benefits while investing in your retirement. How much you can contribute each year depends on things like your salary and your age. A tax professional should be able to answer questions you have about IRAs.

Prep for your children’s future

If you’re a parent looking for personal finance goal examples to add to your checklist, you’ll want to consider saving for your child’s education. The most obvious cost is college, but you may also want to send your kids to private preschool, secondary school or graduate school. It all adds up, and it’s never too early to start saving for it.

You can always put money aside in a savings or investment account, but a 529 account may be an even better option for school-related savings. Offered by most states, 529s allow you to invest money in your children’s education, then withdraw the funds tax-free when it’s time to pay their tuition. In the past, 529s could only be used for college and graduate school. Today, they can be used to pay for private preschool, grade school or high school.

Insure what matters most

Thinking through your end-of-life wishes can be uncomfortable, but considering how your family will be affected in the event of your death is important. A life insurance policy is a way to invest in the financial security of your family even after you’re gone.

How does it work? When you buy a life insurance policy, you agree to pay regular premiums in exchange for a benefit when you die. That benefit would be distributed to the beneficiaries of your choice, such as your spouse or children. There are 2 basic types of policies:

  • Term insurance covers you for a specific number of years.
  • Whole life insurance pays a benefit regardless of when the policyholder dies.7
     

If you still have questions, a professional insurance broker or financial planner can offer you guidance, specifically on policy types and how much coverage you need. You can also get an idea by using an online calculator to determine how much life insurance you may need and how it could impact your finances.

Wherever you are in your journey, it’s never too early (or too late) to create a financial checklist. As you progress, you can always adapt your goals to fit your changing financial needs. But getting it down on paper, or into a spreadsheet, can turn broad ideas into concrete plans, which can inspire you to keep working toward your goals.


This site is for educational purposes. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

  1. Shell, A. (May 4, 2018) Ouch! Average credit card rates hit new high. Retrieved on October 16, 2018 from:https://www.usatoday.com/story/money/personalfinance/2018/05/04/average-interest-rate-new-credit-cards-hits-record-high/577238002/

  2. What is a payday loan? (June 2, 2017) Retrieved on October 16, 2018 from: https://www.consumerfinance.gov/ask-cfpb/what-is-a-payday-loan-en-1567/

  3. Backman, M. (October 24, 2016) Nearly 3 in 5 Americans are making this huge financial mistake (October 24, 2016). Retrieved on April 10, 2018, from: http://money.cnn.com/2016/10/24/pf/financial-mistake-budget/index.html

  4. Chang, J. How much should I save in a retirement fund? (April 12, 2018) Retrieved from: https://www.learnvest.com/2016/04/3-6-9-rule-of-emergency-savings

  5. Ultimate guide to retirement (n.d.) Retrieved on October 16, 2018 from: https://money.cnn.com/retirement/guide/pensions_basics.moneymag/index7.htm

  6. Bloom, E. (June 13, 2017) Here’s now many Americans have nothing at all saved for retirement. Retrieved on October 16, 2018 from: https://www.cnbc.com/2017/06/13/heres-how-many-americans-have-nothing-at-all-saved-for-retirement.html

  7. Personal Insurance, USA.gov (January 2, 2018). Retrieved May 18, 2018, from: https://www.usa.gov/personal-insurance

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