Why you need to set your financial goals early in life
Stepping into adulthood is the time when you leave behind the structure of the school and home life you're used to and start figuring things out on your own. It’s moving from a world where everything is kind of planned out for you, to one where you're in charge of your own decisions. It's exciting, but it’s also a bit of a rollercoaster.
This stage in life is all about finding your footing. You're working out who you are, what you want to do, and how to be independent. Right now, it's all about you, figuring out what you're good at, what you like, and getting ready for the adult world.
But while you're busy trying to sort out your life and making big decisions, there's something really important that you might miss: learning about money and how to manage it. It's an essential life skill, and it will prove vital to your success later in life.
You’ll learn that as with many of the most important things in life, your financial journey begins with knowing your destination.
Here are the life-changing benefits of setting your financial goals early in your adulthood:
Setting financial goals gives you a clear direction.
Whether it’s saving for further education, starting a small business, or planning a trip, having specific goals helps in chalking out a path to achieve them. You’re familiar with budgeting and saving money, you’ve done it before with your allowance and you know that it’s usually most effectively done with good motivation.
When you set financial goals, every peso you spend or save gains purpose.
This awareness fosters smart spending habits. You're less likely to splurge on impulsive purchases and more inclined towards thoughtful spending that aligns with your goals. It's not about restricting yourself but about making more informed and beneficial financial choices.
You’ll be more prepared for emergencies.
Life is unpredictable. Setting aside funds as part of your financial goals can be a lifesaver in unforeseen circumstances like medical emergencies or sudden job loss. This emergency fund acts as a financial cushion, giving you peace of mind and reducing stress during tough times.
You’re empowered to make bigger life decisions.
Clear financial goals set the foundation for bigger milestones like pursuing further studies, moving out to live on your own, or switching careers. They enable you to plan and save for these events systematically. So when the time comes that the thing you want to do becomes something you need to do, you are financially prepared.
You get more time to work on your financial success.
Lastly, setting financial goals is not just about immediate needs or wants. It's also about securing your future. Investing in UITFs, mutual funds, bonds, stocks, real estate, REITs, or other instruments depending on your risk appetite as part of your financial goals contributes to long-term wealth building.
The earlier you start, the more you benefit from the power of compounding (and you’ll encounter this phrase many more times as you read our guides), ensuring a more comfortable and secure life ahead.
Now, remember that when you set your goals, you have to make them SMART, i.e., Specific, Measurable, Achievable, Relevant, and Time-bound. Instead of putting down “move out and live closer to work,” make it more attainable by setting something like “save PHP100,000 in two years for your moving out fund.”
You’re on your own now, and it will be scary at first. But with the right amount of planning and financial knowledge, you can be more confident about taking your next steps.
Read more about how you can get started in your financial journey:
