10 Financial Goals to Aim for in the Next Six Months

Many of us have faced tough times recently, and some of us have realized that we’re not as well prepared for financial uncertainty as we thought. As we all try and get back on track financially, here are some goals to work towards over the next six months.

(Re)Build an Emergency Fund

Fairly recently, I wrote about how most emergency funds don’t cover a genuine emergency. Since then many of us have dealt with the various financial problems generated by a worldwide pandemic, and realized that we really do need a more robust emergency fund.

Building up a healthy emergency fund (or re-building it if you were forced to dip into it) really should be a top priority.

Your emergency fund should be somewhere easily accessible and very low-risk, which by definition, means it won’t be earning much in the way of interest, but that’s OK. Emergencies require quick and easy access to liquid funds, as many of us have found out recently.

Deal with Debt

Notice that this goal is ‘deal with debt’, not pay it off. A huge amount of money-related stress is tied to debt. Paying it off isn’t always an option, but dealing with it can free up the emotional energy to focus on other goals, financial and personal.

There are many ways to deal with debt, even in a recession. You may need to consolidate it, move it around, renegotiate it, pay it down, or eliminate it. Take advice if you need it, find a debt repayment strategy that will work for you, and put a solid plan in place to deal debt over the next six months.

Streamline Your Insurance

Adequate insurance can protect your finances, and even reduce the need for an emergency fund. However, it’s a tricky area. Many people are underinsured, while others are actually wasting money by paying for more insurance than they really need.

If you live in the USA, health insurance is vitally important. You’re probably aware that around two-thirds of Americans who file for bankruptcy do so due to medical issues. When it comes to other types of insurance, however, things aren’t quite as straightforward. Things like auto insurance and pet insurance can save you a fortune in an emergency. Just make sure you’re not over-insured. Life insurance is another difficult one. Work out exactly how much you need, and then check your policy to make sure you’re not overpaying on this one.

Take a Look at Your Tax Situation

Around 75% of Americans get a tax refund, and the average amount returned is $3000. Many people tend to treat their refund as if it’s a windfall. In fact, if you get a tax refund, it means you lent the government money, interest-free. You overpaid your taxes, and did without that money for a while.

Yet people still tend to think, ‘the government gave me $3000’, not ‘the government kept my $3000 all year and cost me the money that money could have earned in interest’. Sometimes you don’t get a choice. An employer or other entity may pay or withhold tax on your behalf, but it’s worth seeing if you can do something to avoid that.

Your tax situation is also linked to how you use your money to help others. Remember that you may not need to pay tax on money that is given to charities and non-profits. Your tax obligations depend on where you live, and your personal circumstances. Ask your tax preparer for personalized advice.

Declutter Your Finances

Decluttering is good for your mental health, whether it’s physical, emotional, or financial. Decluttering finances can involve going through documents, shredding what you don’t need, and organizing what you do.

It can involve setting up automated bill payments or automated monthly transfers into savings accounts. It can also involve ascertaining exactly where all your money is, what your current interest rates are, and even if you are using your credit cards in an optimal way to maximize any points and rewards schemes.

Another thing that might be part of your decluttering process is listing, in one place, all the numbers that are relevant to your personal financial life. This might include your net worth, your liquid assets, balances in your bank accounts and other investment accounts, and your credit score.

Once you’ve streamlined your finances and know exactly what’s going on with them, it’s easier to see where things can be improved.

Get Mindful About Spending and Saving

One of the reasons we tend to feel out of control when it comes to finances is that we spend mindlessly, digging out our credit cards multiple times a day, often for things we don’t need, or even want. Spending is influenced by all kinds of things, from the friends we keep, to the marketing we’re exposed to.

I wrote recently about keeping a finance journal. It can really help you get mindful of what (and why) you spend (and save). If journaling about finances really isn’t your thing, it still helps to get mindful of your spending. Sit down with your financial records once a month and reflect on what you’ve done with your money.

Think about where your money is going, why you spend on the things you do, and if you can better align your spending with what you really want your life to look like.

Create More Income Streams

Creating multiple income streams can really help boost your personal finances. Extra income streams can come from side hustles, freelance work, an investment property, or even a hobby you can monetize at some level, such as a sport or skill you can coach or teach.

Extra income streams protect you if you experience something drastic, such as losing your job or another main income stream. But they can also focus you in terms of your overall financial planning. You might decide, for example, to put all income from a particular source into paying down debt, building up your retirement funds, or saving for a house.

Earn More Than You Need

This is a common financial goal, but it’s often phrased as ‘live within your means’ or ‘live on less than you earn’. This can seem impossible, especially when your income drops, or you’re simply not earning much. It can help to look at it as ‘earn more than you need’, as this encourages you to look at both reducing what you need and increasing what you earn.

Adding a new income stream, for example, means you’re earning more. If your immediate needs were just about being met, and they haven’t changed, you’re now earning more than you need. This allows you to think carefully about how to allocate the ‘extra’ money.

This isn’t about constantly depriving yourself. It’s more about prioritizing the money coming in. It’s about meeting urgent needs, less urgent needs, and then wants, in that order.

Plan for the Future

Financial goals work best alongside other life goals. The best motivation to save and invest is the knowledge that you’re working towards something, Whether you plan to retire early, travel the world, buy a house, start a business, or put your kid through college debt-free, knowing what the actual plan is, makes the financial plan easier to stick to.

Some people refer to this as ‘knowing your why’. Focusing on why you’re saving, not just how and what you’re saving, is a great motivator. Having a clear plan can help you refine the details, as well, when it comes to finances.

We all know we have to save for retirement, but what kind of retirement? What exactly do you want your retirement to look like? Knowing that will help you put a more detailed plan for saving and investing in place.

Confront Your Own Mortality

Putting your financial house in order shouldn’t be something you do just before you die. After all, none of us know when that will be. Confront the issues that will affect your loved ones on your death, from getting that life insurance in place, to making a will.

If your estate is considerable, you’ll probably want to consult a professional about the impact of estate taxes and how to minimize them. You might also want to look at the possibility that your debts can be passed on to others, and make sure you pay off any that fall under that category.

Maybe the above goals will make sense to you. Maybe you’ll have a few of your own to add. The important thing is to put some goals in place. With finances, as with most things, it’s easier to get to where you want to be if you know exactly where that is.

Other articles you may enjoy:

• The Best and Worst Ways to Use Your Credit Cards
• What is a Virtual Financial Advisor (and Why You Should Consider Hiring One)