One of the primary concerns faced by financial counselors is the goals their customers set for themselves and what goals they should recommend instead. Setting what kinds of goals would be most effective and the ability of the customers to comprehend these fully. What makes this concern more addressable is the fact that each individual dwells in entirely separate circumstances than any other. Everything like income, expenses, priorities and limits change from individual to individual. Keeping this fact in view giving a generalized plan is not possible and every customer needs a tailor made solution to be served to match their needs. Even as generalized solutions not possible inclusion of some basic goals might be of great help.
1. An Emergency Fund: Every customer is strongly recommended to have an emergency savings fund as a primary goal. Every customer, regardless, is advised to build a sizeable emergency savings fund to which contributions are made every month at least. The monthly amount varies for each customer but the presence of such a contribution should be felt. A prudent advice would be to build an emergency fund which is worth six to nine months of income so as to have something to fall back on in times of emergencies or layoffs. A nine month backup is recommended as statistics show the present gap of being laid off and re-employed is around nine months.
2. Be Debt Free: A lot of customers face the problem of being debt laden. With ever mounting debt things do seem to be getting out of hand but no matter how dire they seem the debts can be paid off. A lot of workers work each day to pay off these debts. The important thing to remember here is to stop borrowing, especially on high interest rates. When there is no more borrowing paying off the existing debt is not a daunting task. However, if the customer is already in substantial debt then making regular payments to cover the debt should be of first priority and other things should be put on hold if need be.
3. Plan for Retirement: Not a lot of people give much thought to their retirement plans. Most of them have a vague idea or a magic number at best. Have a detailed retirement plan instead and work towards achieving it. Plan according to your retirement needs and take advantage of 401k plan if your employer offers it. Start early so you don’t have to set aside a lot along the way and you will end better as well.
4. Owning A Home: Being well educated about pre-purchase home buying and saving a sizeable amount for down payment so as to get a good home loan easily is a good way to begin home ownership. Private Mortgage Insurance costs can be avoided by doing so which is an addition to savings.
5. Auto purchase: Going in for trading in a new car as soon as the debt on the current is paid off is entering into a new debt all over. Instead, drive the one paid off till there is enough saved for a new one.
6. College Tuition: This is one of the important savings goals everyone should have because it is a big expense. A college savings calculator can be used to build on the 529 plan.
7. Amusements: While all the long term savings are important save a little once in a while for a little indulgence like vacations, gadgets, adventures etc.