7 Best Financial Goals for Students (And Why You Need ‘Em)

Learning how to set financial goals as a student is a smart move to secure your financial future. You don’t need to be a financial expert to start.

Let’s explore what financial goals are, how to set them, and go over the 7 best financial goals for students to build a strong financial foundation.

☞ What is a financial goal?

A financial goal is like a target for your money. It’s something you want to achieve, whether it’s saving up for a dream vacation or building a million-dollar nest egg. These goals help you manage your finances, make decisions about saving or investing, and work towards the life you want.

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Why set financial goals early?

Starting early with financial goals is a wise move. It helps you develop good money habits that can pay off in the future. The sooner you begin, the more money you’ll likely have when retirement comes knocking.

While setting goals is important, keep in mind that it doesn’t guarantee success, as everyone’s financial situation is unique.

For instance, someone with disabilities may face unexpected medical bills despite setting financial goals. It’s essential to adapt your goals as needed and seek guidance from a financial expert if necessary.

What are the types of financial goals?

Financial goals come in three flavors, depending on how long it takes to achieve them:

1. Short-term: These are goals you want to accomplish within a year, like taking a vacation, moving to a new place, or buying a new gadget.
2. Medium-term: These goals take one to five years to achieve. Examples include saving for a big trip, graduate school, a wedding, or a down payment on a home.
3. Long-term: These goals take more than five years to reach. Think of long-term goals as saving for retirement or amassing a significant down payment for a home.

When setting financial goals, be realistic about what you can achieve, given your circumstances. Adjust them as needed and seek expert advice when necessary.

☞ Best financial goals for students

Setting financial goals is a smart move, especially when you’re a student. Alissa Krasner Maizes, the founder of Amplify My Wealth, suggests starting with what you value most.

Your values can be your guide in making the right financial decisions that align with your goals. Begin with smaller, achievable, and measurable goals that you can keep track of and adjust when needed.

1️⃣ Set a Budget

A budget helps you see where your money comes from and where it goes. Regardless of your income, knowing what you have, spend, and save is crucial. It’s like having a financial roadmap.

Markia Brown, a Certified Financial Education Instructor, recommends listing your income sources and reviewing your expenses. Distinguish between needs and wants to identify areas to cut back on when necessary. Regularly update your budget to reflect changes in your financial situation.

2️⃣ Start Saving

Start building the habit of saving now, even with as little as $5 or $10. Many banks allow you to open an account online. Consider factors like interest rates, fees, and account features when choosing a bank. Setting up automatic transfers to your savings account can help you establish a consistent saving routine.

3️⃣ Invest for Retirement

Investing for retirement is a crucial long-term goal. The earlier you begin, the better. If your employer offers a retirement plan like a 401(k), have a portion of your paycheck allocated for it. You can also open a Roth IRA, which takes advantage of your current low tax rate.

Jeff DeMaso, a financial expert, recommends looking for low-cost index funds and gradually increasing your contributions as your income grows. Not everyone can save for retirement early, so consider your circumstances.

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4️⃣ Build an Emergency Fund

An emergency fund is your safety net for unexpected expenses. Start small, even with $10 a week, and work your way up. Alissa Maizes advises aiming for at least six months’ worth of living expenses. It’s a lifetime goal that provides financial security.

5️⃣ Reduce Student Loan Debt

Student loans can be burdensome after graduation. Seek scholarships and grants to reduce your borrowing. Apply for opportunities both within and outside your school. Filling out the Free

Application for Federal Student Aid (FAFSA) each year helps determine the aid you’re eligible for. Explore federal work-study programs to earn money for expenses rather than relying solely on student loans.

6️⃣ Build Your Credit Score

Building good credit early is essential for future financial endeavors like buying a car or a house. Use a credit card wisely, paying off the balance in full each month. Be cautious of high-interest rates that can lead to debt.

7️⃣ Use Debt Sparingly

While some debt may be necessary for education, try to minimize it. Explore alternative ways to generate income, such as tutoring, internships, or part-time jobs. After school, create a debt repayment plan prioritizing higher-interest debts.

As you pay off each debt, allocate the extra money to the next one. Reducing debt is a medium- to long-term goal that can free up funds for other objectives.

☞ FAQ

What are the top 5 common financial goals for students?

Financial goals are essential for achieving financial stability and ensuring a secure future. While the best financial goal varies from person to person depending on their unique circumstances, here are some common financial goals and examples of long-term goals for students:

5 Common Financial Goals:

1. Emergency Fund: Building an emergency fund is a common financial goal. It involves setting aside funds to cover unexpected expenses, such as medical bills or car repairs, without relying on credit.
2. Debt Repayment: Paying off high-interest debts, such as credit card debt or student loans, is a crucial goal for many individuals. Reducing debt can free up financial resources for other purposes.
3. Savings for Specific Expenses: Saving for specific expenses like a down payment on a car or a home is a common goal. These savings can make significant purchases more affordable.
4. Investing for Retirement: Saving and investing for retirement is a long-term goal that ensures financial security in your later years. Starting early can lead to a more comfortable retirement.
5. Building Credit: Establishing and improving your credit score is important for future financial endeavors, such as obtaining favorable loan terms or securing a mortgage.

What are the top 5 long-term goals for students?

1. Building an Emergency Fund: Having a robust emergency fund is beneficial in the long run as it provides financial security in case of unexpected events.
2. Paying Off Student Loans: Reducing or paying off student loans is a significant long-term goal for students. It can relieve financial stress and free up funds for other purposes.
3. Saving for a Car Down Payment: Saving for a car down payment can make it easier to purchase a vehicle without taking on excessive debt.
4. Saving for a Mortgage Down Payment: Preparing for homeownership by saving for a mortgage down payment is a long-term goal that can lead to homeownership.
5. Investing for Retirement: Beginning to invest for retirement at a young age can help students build wealth over time and ensure a comfortable retirement.

What is the best financial goal for students?

The “best” financial goal for an individual depends on their financial situation, priorities, and aspirations. It’s essential to set goals that align with your values, current financial capacity, and long-term objectives.

Reviewing and adjusting your goals periodically is also important as your circumstances change. Ultimately, the most effective financial goals are those that contribute to your financial well-being and long-term financial security.

☞ Final thoughts

In conclusion, it’s never too early to start managing your finances wisely. Establishing good financial habits and setting financial goals at a young age can pave the way for a brighter financial future.

However, it’s important to remember that setting financial goals is just the first step in the journey towards financial success. While it provides a roadmap, it doesn’t guarantee automatic success.

As you embark on your financial journey and work towards achieving your goals, it’s essential to celebrate your milestones along the way and acknowledge your progress.

Whether you have extra money to save each month or not, simply being mindful of your finances is a significant achievement. These steps you take now will always serve you well and empower you to make informed and prudent decisions with your money.

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