It can be tough to know what type of financial goals for milestones we should be working towards as young professionals. Unless your high school / college was different from mine, I didn’t learn a lot about personal finance and had to learn a lot on my own and through trial and error. 

Despite not having a ton of education on solid financial goals we should be working towards, they are still very important to set as without goals or a destination in mind, it’s easy to wander through earning and spending money aimlessly and we might be missing out on the time value of money and potentially the ability to take advantage of tax benefits. 

I can’t tell you what your personal financial goals should be, as you are likely different from me in your upbringing, your financial situation and your own likes and dreams that you have in life. I’m not going to attempt to list out the perfect rules that you must do to achieve success…lol there’s plenty of influencers who have made those lists for you. Instead I’m going to share some of the goals Mrs Money and I set for ourselves throughout our journey so far! Feel free to pick and choose or dismiss altogether, I just know that these goals have been great for us and we are excited about our progress on our own journey. 

Save $1,000 for an emergency fund 

When I started my first real job out of college (not counting my time at Captain Dave’s Army Navy Surplus right out of college) I moved down to a new city and had my Jeep paid for and maybe $2,000 to my name. I had enough to pay the first months rent and the deposit for my apartment and that was about it. I realize that I was fortunate not to graduate with student loan debt (thanks Mom/Dad!) and not have other debt but I didn’t have much else! 

My very first goal was to save up $1,000 in a separate savings account that I would use as my emergency fund. $1,000 isn’t very much in the grand scheme of things but this was a big milestone for me –  it gave me the feeling of security that I had a safety net under me. It wasn’t a very big net but still a safety net. In hitting this goal I joined the club of only 43% of Americans who could weather a $1,000 financial emergency.

During this time I didn’t ONLY save money in my emergency fund, I had a budget that allowed me to spend some on of course monthly necessities and also a little fun here and there, but most of any excess (which wasn’t a lot) went to my little emergency fund. 

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Contribute enough to get the free 401(k) match at work 

After hitting my $1,000 goal and feeling a bit better about being secure financially, I then set out to get all the free money I could at work – aka the free match that my employer would give in my 401(k). It wasn’t much – 2% of my salary but I had to also contribute 2% to get the match. Now that I had some extra money not going to my $1,000 goal, I was able to diver that money into contributing 2% to retirement. Saving for retirement is important and I had to start somewhere and free 2% is free money!

Save 3 months for an emergency fund

As you may get the sense, it feels a bit like things are picking up speed here – some financial minds might call this the ‘snowball’ effect. Now I turned my extra attention and money (granted still not a lot) to my emergency fund. At this point I was slowly increasing my general living and fun budgets; now I felt like I had some of the basics taken care of, but I still wanted to have a little more security underneath me (I’m a bit more risk averse) and so I went back to my emergency fund and built up 3 months worth of expenses saved. I’m a big believer on forward progress and really didn’t want a setback to throw me off so having more in my emergency fund felt good to me. 

Pay off college debt

If you were paying attention at the beginning of this article you’ll note that I mentioned not having college debt. However I married my wife who had some student loan debt, and this was something we wanted to get aggressive towards paying off. Her interest rates weren’t that high (6-8%) but it felt like more than what we could earn investing that money in the stock market and it was definitely more than the we could earn by putting our money into a savings account. So, we got pretty aggressive and paid several extra hundred dollars each month towards her college debt. It ended up taking about 2 years but we set a goal and were motivated to finish it out. We were super pumped to have her debt free and it ended up allowing us to have more breathing room in our budget to be able to do a lot more with that money that we were paying towards her loans.

Save a down payment for a house (and buy one) 

Towards the end of aggressively paying off Mrs. Money’s student loans, we already had set our sights on our next goal; buying a house. It’s been fun setting goals and working towards them, as you start getting close to finishing one goal you start dreaming of the next one and the motivation is there as you feel great having accomplished your goal. We knew pretty early on in our marriage that buying a house was going to be a goal of ours – we believed that it would be a great way to build long-term generational wealth for our future family and we wanted to start earning equity vs rent. 

One number you’ll often hear when it comes to buying a house is 20% – i.e. a 20% downpayment. This number is often cited as if you put 20% down for a house you can avoid paying PMI – private mortgage insurance – which in my experience was $80-$100/month extra. It used to be tax deductible but not anymore. We ended up really wanting to buy a house before we had 20% – that can be a lot – a $300,000 house (which feels low in this market!) would require a $60,000 downpayment – and so we ended up buying a house with I think like 3% down. In our experience it was totally worth it – the $80-$100 / month wasn’t that bad and the appreciation (i.e. rise in home value) we received in those first few years quickly made up for it. Long story short but we ended up refinancing probably 3 years in – we got a lower interest rate and they recalculated the value of our house and found that we at that time had more than 20% equity which means we got rid of PMI. 

But back to our goal – we started saving up our extra money for the house and once Mrs. Money was done paying off her loans it was easy to do – we just took all that money we had been paying and put it towards our house fund! 

This can also apply to other larger purchases you may have – perhaps you’re in the market for a new laptop. Planning ahead to save will better help you achieve your goal!

Save $4,000/kid/year for college 

Continuing to move forward in our life story, a few years ago we welcomed BabyMoneyFinance and then SegundoMoneyFinance after that. As I mentioned earlier in the post – I was fortunate to graduate college without student loans and in my case for me to achieve that it meant that my parents paid for me. It ended up being a huge blessing and one that I would love to pass along to my kids. To do so though, I’ll need money and college isn’t cheap. The average in-state tuition for a public university is $26,027 meaning I’ll need to have $104,108 set aside per kid. Yikes, kind of wish I hadn’t done that math! On top of that who knows how much college will cost in 18 years or so when they start going to college.

A good way to save a big pile of money is to start early and start often. There’s a powerful financial feature called compound investing – basically the interest/gain you earn gets reinvested and then the interest/gain next time is slightly bigger…and so on. Even better than that is a method of saving that allows you to not pay taxes and drum roll please…that’s why I’m putting money for college in a 529 plan (link to my article on how they work). Different states have different rules but in my state (Georgia), you don’t pay taxes on the gains, you can use it at an in-state school or out of state, and if one kid doesn’t need it you can use it for another kid or another family member like a cousin. Furthermore the contributions are deductible off your GA state income taxes.

When BabyMoneyFinance was born I did some math and roughly found that if I put away $4,000/year then by the time they were 18 and heading to college, I should have $80,000 set aside. At the time that was the price(ish) so I landed on $4,000/year/kid. This is proving to be a challenging goal but one that I am working hard towards! I figure better to fall short of that $4,000/year a year or two vs not saving at all! Future BabyMoneyFinance and SegundoMoneyFinance if you’re reading this know I tried hard for your college tuition!

Max 401(k)

Another goal that I’m currently working towards is maxing out my 401(k) – i.e. taking full advantage of tax benefits offered by the government. In 2023 I can contribute $22,500 to my 401(k) and that is a goal I am working towards. Last year was the first year I met this goal and I’d love to continue the trend of meeting that goal! It’s tough now but I’m thinking my future self will thank me!

What’s next

As I mentioned, I’ve been one to have been motivated by goals and as I continue to work towards hitting some goals and hitting others, I am excited to set new goals for myself. Some of the goals I’ve been setting for us:

• Contribute to a post-tax 401(k). Certain employers (mine does) will allow you to keep contributing past the $22,500 – up to $66,000 via an after-tax plan. This is still a new idea to me and I’m not 100% sure yet how it works but I want to be at a spot financially where I can do learn! 
• Keep growing our real estate portfolio. Ok so a portfolio makes it sound like it’s something more than it is, but right now we’ve got 1 rental property and 1 tiny house lot. We’d love to keep reinvesting the rent we get from this one rental property into future rental properties. I imagine this will take a few years but it’s something we’re working towards! 
• Save money not for emergencies but for opportunities. Mrs. Money came up with this one and I love it – she was talking about how we should start thinking less month to month and more big picture – and be able to take advantage of opportunities when they present themselves. Maybe it’ll be to buy a distressed property or invest in a local business or take advantage of a really good sale on something we’ve had our eye on for far too long. I’m not sure what this will look like but I love the idea of saving up with the goal of using it for something big one day! 

TLDR

Goals are important in life, even in your personal finance life. Goals will look different for each of us depending on who we are, what we value and what stage of life we’re in. I hope that by walking through some of the goals I’ve set for myself that you will be inspired in your own journey to start setting and working towards some financial goals!