Setting financial goals is essential for anyone, regardless of their income level. However, for someone on a low income, it can be challenging to know where to start. In this blog post, we will provide financial goals examples for short-term, mid-term, and long-term goals that are achievable for someone on a low income.
Short-term financial goals are those that you can achieve within a year or less. Here are three examples that are achievable for someone on a low income:
- Build an emergency fund: An emergency fund is critical in case of unexpected expenses such as car repairs, medical bills, or job loss. Set a goal to save $500 to $1,000 in an emergency fund.
- Pay off high-interest debt: High-interest debt can be a significant financial burden. Set a goal to pay off credit card balances or personal loans with high-interest rates.
- Reduce unnecessary expenses: Take a close look at your budget and identify any expenses that are unnecessary. Cut back on subscriptions, eating out, or entertainment to save more money.
Mid-term financial goals are those that take between one to five years to achieve. Here are four examples that are achievable for someone on a low income:
- Save for a down payment on a house: Set a goal to save for a down payment on a house. Look for assistance programs such as HUD-approved housing counseling agencies, or down payment assistance programs offered by state or local governments, that can help you with a down payment, and aim for a down payment of 5% or more.
- Invest in a retirement account: Start investing in a 401(k), IRA, or other retirement account. Even if you can only contribute a small amount, every little bit helps. Look for low-cost investment options such as robo-advisors or target-date funds.
- Build your credit: Building your credit score is one of the most critical financial goals you can achieve. With Brigit’s Credit Builder, you can build your credit score while also improving your financial habits. Brigit’s Credit Builder reports your payments to credit bureaus, helping you establish a positive credit history. Plus, the app can help you manage your finances, avoid overdraft fees, and keep track of your spending.
Long-term financial goals are those that take more than five years to achieve.
- Build wealth for retirement: Set a goal to build wealth for retirement. Aim to have enough savings to cover your living expenses in retirement. Look for assistance programs such as AARP or the National Council on Aging that can help you with retirement savings.
- Purchase a home: Owning a home can be an excellent long-term investment. Look for assistance programs such as the USDA Rural Development program or Habitat for Humanity that can help you with the down payment and closing costs.
- Pay off student loans: If you have student loans, make all your payments and consider refinancing your loans to save on interest. Look for assistance programs such as income-driven repayment plans or loan forgiveness programs for public service employees.
Setting financial goals is crucial for anyone, regardless of their income level.