5 Best Personal Finance Goals for Beginners to Crush This Year

It’s that time of year again where everyone starts getting their goals and New Year’s resolutions ready for a fresh start on January 1st.

Whether you’re a resolution-er or not, setting personal finance goals should be a part of everyone’s financial planning strategy, no matter what stage you’re at.

Even though this post is titled “5 Best Personal Finance Goals to Crush This Year,” that doesn’t mean that you have to wait until January 1st to start setting goals, budgeting, and getting your finances on track.

How much further along would you be if you started today?

Starting today will give you momentum with your personal finances going into 2023!

And if you’re looking for some examples of personal finance goals for inspiration, keep reading for a list of 5 beginner-friendly financial goals to work toward this year!

What are Personal Finance Goals?

Personal finance goals are milestones that get you closer to your ideal life once you hit them.

They are NOT your monthly budget or spending plan.

Think about it, your finances affect everything in your life. If you have goals to retire one day, take a month-long road trip, or save for your dream home, you have to set financial goals to make those happen!

It’s highly unlikely that you’ll “accidentally” have enough in your 401k to be able to retire comfortably. You have to actively set goals and follow through on them in order to make it happen.

Personal finance goals should be SMART goals. They should be specific, measurable, achievable, realistic, and timely.

Simply saying, “I want to save a home downpayment this year” isn’t good enough. How much do you want to save? When can you realistic save it?

“I am going to save $15,000 for a home downpayment in 18 months by saving $833 per month in a high-yield savings account” is more like it. You have a specific goal with a purpose, and an actionable plan to hold yourself accountable!

Related: How to Set Financial Goals for the New Year in 6 Crystal Clear Steps

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Types of Financial Goals

Personal finance goals can be short, mid, or long term.

It’s good to have a mix of all 3 in your financial plan!

Short Term Financial Goals Examples

Here are a few examples of short term personal finance goals:

• Saving $10,000 to pay cash for a car in 18 months
• Funding your Christmas sinking fund in the next 6 months by saving $100 per month
• Saving $20,000 for a home downpayment in 2 years
• Paying off your $5000 credit card debt in 8 months
• Opening a Roth IRA and contributing $6000 this year

Short term personal finance goals usually involve saving money in a bank account for a specific purpose, like a home downpayment, car, or other large purchase.

You’ll want to keep this money liquid to you in a high-yield savings account (I use this one) to earn a little bit of interest on your money until you need to pull it out.

Do not invest money that you’ll need in the next 2 years! Investment returns aren’t guaranteed in the short-term, so you could end up losing money by doing this.

Mid Term Financial Goals Examples

Mid term financial goals are those that you want to achieve in the next 2-5-ish years.

Some examples of mid term financial goals could be:

• Paying off your home in the next 4 years
• Saving $60,000 for a kitchen remodel in 3 years
• Saving $10,000 for a luxury vacation in 5 years

You most likely want to save this money in a high-yield savings account along with your short term financial goals, but if my goal was closer to the 5-year mark, I’d think about investing that money instead.

With a time horizon of 2-5 years, you (likely) won’t earn much on your investment and you take on a larger risk of the market going down. The last thing you want to do is invest money that you plan to pull out in 2 years and realize the market is down and you end up losing money!

The 5-year mark is when I would consider investing vs. saving cash.

Anything with a shorter timeline than that, just keep in cash! The risk is probably not worth the few years of potential earnings in the stock market.

Long Term Financial Goals Examples

I consider any goal more than 5 years away to be long-term. There are extreme long-term goals like retirement that could be decades away, or something like building a home in 7 years that’s a little more near-term.

Some long term personal finance goals could be:

• Saving $2 million for retirement so you can retire at age 45
• Saving $200 per month in a 529 account for your child’s college expenses in 18 years
• Paying off your mortgage in 15 years instead of 30

Long term financial goals are often more strategy-based and need to be broken down into smaller goals to work toward each year.

The longest-term personal finance goal for everyone is likely retirement, meaning that you’re focused on growing your money by investing it.

I love using this compound interest calculator to project the future value of my current investments.

Plug in how much you’re currently saving for retirement, the number of years until retirement, and an 8% average return (average annual stock market return adjusted for inflation), and see how much you’re on track to retire with!

5 Best Personal Finance Goals for Beginners

These personal finance goals are definitely not a complete list, but they’re a great starting point for anyone looking to get better with their money.

Remember to celebrate your wins along the way and enjoy the journey! Accomplishing goals is very fulfilling but remember to enjoy the process.

1. Create Your First Budget

If you’ve never created a realistic budget before, now is the time to start.

Seriously, it’s really hard to accomplish other financial goals if you don’t have a budget.

How are you going to figure out how much money you have left over every month to pay off your debt, save, or invest for retirement?

If you find yourself always running out of money at the end of the month, or having no idea where your money goes, a budget is the solution to your problem.

Budgeting doesn’t have to be restrictive. A budget is simply a plan for your money.

Instead of getting to the end of the month and wondering where your money went, you decide where you want it to go.

If that means getting Starbucks twice a week, then so be it!

My husband and I personally always budget for weekend trips with friends and eating out. Make room in your spending plan for things that matter to you!

This monthly budget template in Excel/Google Sheets is what we personally use to create and track our budget every month. There are pre-filled categories and an expense tracker included so you won’t forget anything!

If you’re a total beginner with budgeting, try the 50/30/20 budget! There are less categories to keep track of and you budget with percentages instead of set dollar amounts.

Creating a spending plan is a great personal finance goal to get started with!

Related: How to Make a Zero Based Budget (With an Example!)

2. Build a Starter Emergency Fund

Another personal finance goal to work toward in the new year is building an emergency fund.

You know, having money set aside for when life decides to throw you a curveball (car repair, medical bill, job loss- things like that).

How long could you survive if you lost your job tomorrow?

An emergency fund will help you pay your rent and buy food if you lost your job, along with keeping you from going into debt in case of an emergency.

A fully-funded emergency fund is typically around 3-6 months’ of expenses, although this can vary depending on your job situation, if you have super high interest debt, etc.

Notice how I said 3-6 months’ worth of EXPENSES, not INCOME. This amount is probably smaller than you think!

If you’re just starting out with saving money, try saving your first $1000. And then bump it up to 1 months’ worth of expenses. And go from there!

I have a whole blog post about how to figure out how much money you should keep in your emergency fund here!

If you currently don’t have any money in savings right now (like 25% of Americans), building your emergency fund should be your number one financial goal to work on right now.

3. Start Saving for Retirement

Saving for retirement is probably the most common long term financial goal that everyone needs to be working toward.

Do you want to quit working one day? Then you need to be saving for retirement!

Whether you plan to retire in 10 years or 40, the earlier you start the better.

Retirement isn’t an age, it’s a number. If you aren’t proactive with contributing to your 401k, IRA, or other investments, you will have to work until you die.

If you haven’t started saving for retirement or don’t understand how investing works, make starting your retirement fund one of your personal finance goals for this year.

I also have a blog post all about how to start saving for retirement here!

Since retirement is a such a long term goal, here are a few smaller retirement-savings goals that you can set for 2022:

• Open and max out your Roth IRA for the first time
• Educate yourself about index funds, compound interest, and management fees
• Hit your first $1000, $10,000, or $100,000 in your retirement accounts
• Contribute 10% of your salary to your 401k this year
• Set an early retirement age goal

If you’re totally confused about retirement and investing (I was too just a few years ago!), consider taking this Index Fund Investing course.

It’s the only course I recommend on this topic because it’s reasonably priced and perfect for beginners. The founder, Jeremy, retired at age 36 and lives off his investments in index funds.

He covers everything from compound interest, retirement account basics, mutual funds vs. ETF’s, to how the stock market works, and everything in between.

He even shows you step-by-step how to buy a stock!

It’s definitely worth the small fee and will teach you everything you need to know about building wealth for retirement. You can check out the course here.

Plus, 20% of course revenue goes to charity!

4. Pay Off Your Highest-Interest Debt

Another personal finance goal that you can work on in the new year is paying off your high-interest debt.

In my opinion, “high-interest” means anything over 6% and does not include a mortgage.

Carrying high-interest debt is like trying to run up a down escalator. The higher the interest rate, the faster the escalator moves down.

It only weighs you down and slows your financial progress.

Consider what your life would look like with no debt payments.

How much more money could you give, save, and spend?

Soon after graduating college with $56,000 of student loan debt, I knew that my debt payments would only hold me back from the things I really wanted to do in life.

So that’s why I created a plan and paid it all off in 2.5 years!

Now is a great time to finally create that debt payoff plan. Make a list of all your loans, choose a debt payoff strategy, and execute it!

We are NOT bringing more credit card debt into 2023 ya’ll. You are better than that.

Make this your year to finally be free from the chains of high-interest debt. Choose a debt payoff strategy and get going!

Related: Debt Snowball vs. Avalanche Method: Which Debt Payoff Plan is Best for You?

5. Save for a Large Purchase

Think about what the next year looks like for you. Do you have any large purchases coming up?

Consider creating a plan to save money ahead of time for a car replacement or vacation.

It’s the worst feeling coming back from vacation after putting everything on a credit card and having no idea how you’re going to pay it off.

I personally love saving money to pay for large purchases in cash because it helps you avoid impulse spending and forces you to decide if something is really worth it to you.

Yeah, a Peloton sounds amazing right now, but taking the time to save for it in cash gives you time to really evaluate if that purchase will really add value to your life.

It is SO EASY to see the latest phones, cars, fitness equipment, etc and automatically think that we NEED to have it just like everyone else does.

While it’s not bad to have nice things, I just don’t want you to go into debt for those nice things, especially if you find yourself not even using them a few months later!

Do you really want the iPhone 13 or is it just because Suzy has one and it looks really cool?

Will a brand-new car actually make you happy if it means $600 payments for the next 6 years? Or will a 3-5 year-old one that’s half the cost be okay?

Do you actually like spin classes and working out at home, or is social media making you feel like a loser if you don’t have a Peloton?

If the answer is yes to any of these questions, make it a priority in your budget and save for it! (If the answer is no, then use the money that you would have spent toward a financial goal!)

If there is a large purchase you’re planning on next year, open a new savings account and rename it “Peloton Fund” or “New Couch.” It always helps to have a clear purpose of why you’re saving money.

We are done going into debt for large consumer purchases! Because having a couch payment really is pretty ridiculous.

I hope these 5 personal finance goals got you thinking more about your money in 2022.

Whether you’re on a debt-free journey, learning how to save for retirement, or getting on a budget for the first time, learning how to properly manage your finances is so worth it.

If you’re a goal-oriented person like me, the fresh start of a new year is a great time to reset and think about what you want this next year to look like.

Change is definitely uncomfortable sometimes, but it’s worth it. It’s hard to change your habits, but it’s also hard to be in the same place 1 year from now, too.

You have to choose your hard.

Set some goals, create a plan, and execute it. You got this!

What is one personal finance goal you’re going to work on next year? I’d love to hear it in the comments below or over on Instagram!

-Megan

Read next: 7 Limiting Beliefs About Money That are Preventing You From Building Wealth