Money Goals: Financial Milestones For Professional Young WomanBy Her Agenda
Jun. 18 2018, Published 10:33 a.m. ET
What road do you take towards true economic success, safety, and wellbeing? To a lot of professional women, focusing on career might seem like the answer that matters most. Keep climbing your way up that ladder, and you will see better returns from it. However, high-earners can find themselves in financial trouble as easily as those making breadcrumbs if they aren’t financially prepared. If you have been too busy focusing on your career to really plan your money, now’s the time to change that.
Here are a few milestones you need to consider, as well as the route you take to reaching them.
It all begins with a budget
One of the biggest issues we face with our finances, in general, is procrastination. Not enough people are budgeting and setting aside the money they need for their financial goals. Too many scale up their living standards, and thus their expenses, alongside their income. One of the best general rules to follow is the 50/30/20 rule. This means that your essential expenses, such as rent, bills, groceries, and the like shouldn’t go above 50%. From the remainder, 30% should go to optional and lifestyle expenses, while 20% of your income should be dedicated to financial goals. Of course, this ratio can be rebalanced depending on your income, circumstances, and goals. But finding that ratio and setting aside the 20% financial goal provision, or however much it is, is essential.
Get debt free
This is a big one. The longer you are held down by debt, the more money you are going to spend in paying it back. Debt acts as a limiter on your financial freedom, chipping away at your existing finances while always acting as a threat looming your economic wellbeing in general. Should something go wrong, like you get injured or you lose your job, debt can devastate you. Sites like The Simple Dollar show ways to cut down on the biggest of them all: student debt. However, start with smaller personal debts you have first as they tend to be the most urgent and the first to come calling if you hit a financial crisis.
Improve that credit score
Many of us want to make big investments down the line. This may mean a car, it may mean buying a home, it may mean starting a business. We’re not listing any of those as our milestones as they are rather subjective. But if you want to make big investments, you need big funding, and that’s more than most of us can save on our own. You need good credit. There are plenty of places you can obtain a free credit report. You can find an eliminate false black marks on your record or see what else is holding you back. Clearing up debt will help, but if you have no credit history at all, that can be just as detrimental to your chances of getting a home. Use sources like Credit Karma to find a credit card you can use to build your credit. Ensure you have a repayment plan in place even before you start using it. Credit doesn’t have to be avoided, it has to be wielded responsibly so that future lenders can see you are a reliable borrower.
Have an emergency fund
A little bit of money set aside can really go a long way when the stuff hits the fan, so to speak. Set up an emergency fund that consists of around 3-5 months’ worth of income. If you lose your job or some other disaster occurs, you have the funding immediately available so you don’t have to rely to costly loans to cover your costs.
We have already mentioned cars and homes as investments, but we were referring to them as investments in your own lifestyle. Investing your money for the sake of financial returns is one of the most crucial steps to true financial success. You can get wealthy through your career alone, but the truth is that it’s rather rare. Whether you invest in solo ventures, like trading on the markets and buying investment properties, or you get into joint investments like hedge funds with the help of services like AlgoTerminal, the sooner you start, the better. There are ways to start investing even when you only have a little to spare. The sooner you start, the sooner you can start seeing profits which can drive future investing.
Maintain financial independence from your career
Getting into investment should play a role in the greater financial strategy which is to earn independently from your “primary job” so well that you’re able to sustain yourself no matter how your career goes. Invest enough and you can earn enough in dividends to live from. However, it can take a lot of time and good decision making to get that far. It might be a good idea to start looking at “side gigs” and self-employment opportunities. If you spend even a little time offering your expertise and services under your own name, you can start building a brand and an income stream that you can choose to expand if and when your career isn’t there for you or you decide to leave it.
Build a nest egg
The future is the great unknown and you can never really be prepared for every eventuality, but you can ensure that your finances can carry you through as best as possible. Sites like US News can help you find retirement funds that you should start contributing to as soon as possible. The sooner you start with retirement savings, the less you have to pay in and the easier it is to reach your goals. Don’t forget to invest in the right insurance so that your risk of sudden financial ruin is minimalized as much as possible.
Financial success must be planned, whether you’re scratching out a living or at the top of your game. Without the right preparation, it can all go away so easily, after all.
[Editor’s note: This post is from one of our trusted partners.]