15 Financial Goals for 2022

By: Stacey Nickens

As 2022 dawned, the Elm3 team was enjoying time with family, preparing for tax season, and setting our individual financial goals. Writing down your goals is immensely helpful in driving success; however, only about a third of people write down their aspirations, according to Schwab’s Modern Wealth Index. At the same, the Financial Health Network found that only a third of Americans have strong financial health. Are these two statistics related? Potentially!

Setting financial goals is immensely beneficial in many ways. Having a plan helps you worry less about money and feel more financially stable. Financial goals can also help you reduce debt, invest more successfully, and avoid unnecessary fees and costs.

Process-Oriented Financial Goals

Process-oriented financial goals help you determine how you are going to reach your short-term, medium-term, and long-term financial goals. Process-oriented goals address the what, when, where, why, and how questions regarding your financial health.

1. What and Where Goals: Establish systems that will assist you in following a budget, investing intentionally, and paying off debt. What budgeting tools can help you track your spending? Consider where you are investing your money. Is a significant portion of your savings in cash? You could set a Where Goal of moving that cash to an investment account. Do you have young children? You could set a Where Goal of moving some cash savings into a 529 Plan or an UTMA.
2. When Goals: Get out a calendar and schedule times to review your budget or rebalance your portfolio. Scheduling these tasks will assist you in building healthy financial habits.
3. Who Goals: If you have a partner, spouse, or children, the other members of your household need to understand and assist with the household’s financial plan. Schedule a time at the beginning of the year when you and your family can discuss your group and individual financial goals, such that everyone is on the same page.

Short-Term Financial Goals

Short-term financial goals should be achievable in the next few months. You may even be able to cross some of these goals off of your list today!

1. Develop your Financial Wishlist: Your financial wishlist could detail your retirement dreams and an estimate of the funds necessary to achieve those dreams. Your wishlist may also focus on emergency fund, college savings, long-term care, home ownership, and vacation goals. Imagine a future in which you feel financially stable and successful. What do you envision in that future? Now put a price tag on some of those dreams, and write down those estimates.
2. Evaluate your Savings Rate: How much should you be saving each year? Ideally, you would be saving at least 15% or more of your income. If your savings rate is below that threshold, set some short-term goals for increasing your savings rate. Perhaps you will work to save an extra $50 each month. You should also consider whether you are maximizing your retirement plan contributions. If your employer will match 100% of your contributions up to 4% of your income, try to contribute at least 4% of your income each year. You don’t want to leave matching contributions on the table. To reach your savings goals, it can be helpful to set up automatic, monthly withdrawals from your bank account to your savings or investment accounts.
3. Develop a Budget: A budget will help you reduce spending, reach savings goals, and manage financial stress. If you are in retirement, a budget can also help you manage your savings withdrawals. Traditionally, advisors recommend withdrawing no more than 4% of your account’s value each year. However, if you have a longer time horizon or the stock market is dipping, your safe withdrawal rate may be lower.
4. Write an Investment Plan: An investment plan can assist you in making prudent investment decisions in both bullish and bearish markets. Your investment plan should begin with your investment philosophy. Are you a long-term investor who believes buy and hold strategies are the best? Or are you interested in more active portfolio management? If so, what metrics and tools help you decide the best investments for your portfolio? Beyond considering your investment philosophy, you should consider your risk tolerance, goals, and time frame. Finally, you should research different types of investment accounts such as an IRA, Roth IRA, Brokerage, HSA (Health Savings Account), 529 Plan, or UTMA. Your goals will inform which accounts you choose. If retirement is your primary consideration, look into IRA or Roth IRA accounts. If you tend to have high health costs, you might consider an HSA.
5. Develop a Debt Pay-off Plan: Your plan should account for the different interest rates on your debt. Begin with your high-interest debt, and go from there.

Medium-Term Financial Goals

Now envision the next 5 years of your life. What financial goals do you want to accomplish in this time frame?

1. Build an Emergency Fund: Your emergency fund should equate to three months to one year of your income. Having an emergency fund can help you avoid taking on debt or making imprudent decisions when unexpected costs arise.
2. Boost Your Credit Score: The major credit rating agencies offer many tips for accomplishing this goal. You can increase your score by developing your credit file, making on-time payments, and reducing your credit utilization rate.
3. Create a Long-Term Tax Plan: A long-term tax plan considers your projected taxable income over the course of your life. You can then plan to use different strategies in order to reduce taxable income during high-earnings years or concentrate taxable income when you are in a lower tax bracket. To reduce taxable income, you can plan to maximize deductible retirement plan contributions or employ tax loss harvesting. To concentrate taxable income, you could consider taking taxable gains or making Roth conversions when you are in a lower tax bracket.
4. Determine How You Want to Spend Your Time: You have a limited amount of time to reach your financial goals. Perhaps you want to increase your savings and are unhappy with your current job. Consider getting additional training and moving into a higher-paying field. Perhaps you feel you have extra energy and want to consider getting a second job to increase your income. If you like your job, you may instead plan to work longer in order to reach your savings goals. Finally, if increasing or prolonging your income isn’t an option, return to your budget. How can you cut spending?
5. Pay Off All Debt: In the next 5 years, how can you pay off all of your debt?

Long-Term Financial Goals 

You may be working on your long-term financial goals for the next couple of decades or even your whole life. While this may feel like a long time frame, knowing where you’re going helps protect you from getting lost.

1. Retire or Achieve Financial Independence: Once you have saved up enough money to retire, you will have new short-term and medium-term goals. You will need to determine how much you are withdrawing from your savings accounts and when. You may need to update your investment plan. You will likely need to review Medicare plans and consider medical and long-term care costs. Finally, you will need to review your retirement income sources.
2. Leave Money to Heirs: Leaving behind money and/or property to heirs requires strong financial and estate planning. Make sure you create the appropriate documents to pass along your assets. Determine if your retirement spending will allow you to leave enough behind.

At Elm3, we can assist you in developing a financial plan that addresses and tracks your progress towards all of your financial goals. Contact us today to get started on your financial planning journey.