Unless you know where you’re going, you’ll never get there. Without a destination in mind, you’ll just be aimlessly wandering. It’s important in your personal finance to have goals for yourself; otherwise you won’t have the motivation to better yourself. Tons and tons of articles are out there that talk about saving money and how you can cut back in this area or that area, and ways to have more money in your bank account, but for what purpose? I think that before embarking on a quest towards financial freedom, you have to figure out why you personally want to achieve it. Now, goal-setting can be hard, so let me lay out a few goals that other young professionals like you have set.

Get out of debt (student and credit cards). In order to sail your boat, you first have to make sure that there are no leaks. Otherwise, you won’t get very far. Debt is something I actually think our generation is getting a better grasp of. We all saw the financial crisis of 2008, saw our families struggle when their investments plummeted and watched our friends graduate without jobs. We all heard about people losing their homes and having to declare bankruptcy, all because they had too much debt.

Debt is a pretty terrible thing. We are postponing our future to have things in the present. Student debt, however, is a reality we have to live with. College is both expensive yet also necessary for our future. I like to think of student debt as an investment in our future (see decision of grad school).

Once you’re out of college and you have a decent job, paying down your debt should be a top priority. Getting a bigger paycheck doesn’t mean you necessarily need a bigger lifestyle. Spend less and pay down your debt more. Your debt will get away from you (link to interest article) if you don’t keep an eye on it. The faster you get out of debt, the sooner you’ll be able to breathe easier.

Have an emergency fund. Life preservers are crucial. At least 3, ideally 6 months of expenses set aside is important. What happens when the unthinkable happens? You lose your job and it takes you months to find a new one. You have a health emergency and need surgery that puts you out for a while. It’s a scary world out there, and although you rely on family and friends, you should ultimately look out for number one. At the end of the day you need to be watching out for yourself. Just set up your emergency fund, set it aside and you’ll sleep a lot better each night.

Stock your retirement. You have to make sure your affairs are in order when you arrive at your destination. (Wait, I need to be thinking about retirement?) None of us wants to work forever. Retirement is crucial and unfortunately it all rests on your ability to put money away now. The nice thing about retirement is that if you start early and get in a good habit, it’ll be easy. Set a goal for yourself and stick to it. I know it’s not easy to sit there and watch all that money disappear from your paycheck, but your 70-year-old future self thanks you. If you can put away 15% of your paycheck to your retirement plan, you’re doing great. For young professionals, I’d recommend at least 5%, with the closer to 15% the better.

Save for a house. Because having your own boat is so much cooler. I don’t know about you, but I shudder every time I have to write my rent check. That money is money I’ll never see again and is making someone else rich. The much better alternative is owning your own house. You’re still making a “rent” payment each month but this time it’s going to the bank to pay them back for the house you bought, and it’s your own house! I’m pretty sure the days of putting $0 down for a house is gone, but you can still get away with putting 5% down on a house. The more you put down, though, the less you’ll have to pay in interest. Start saving for a house so you can stop paying rent and actually be investing in your own financial future, not someone else’s.

Make yourself happy. Be sure to enjoy the ride! Although the love of money has been called the root of all evil, when managed properly with the right mindset, it’s a powerful tool that can help you and others around you, to have a better life. Why do we work so hard 40+ hours each week? To have a better life. Don’t forget to enjoy your money. I’ve been blessed with a good job and have worked hard on my budget and now I’m really able to enjoy life. I’ve got a good handle on goals #1-4 and now am able to work on goal #5. It is pretty sweet and I do enjoy my money, and you should be able to as well!

Think through these goals and see which applies to you. Try to choose the one most applicable to your own situation and set your sights on it. Now when you pack your lunch or forgo that movie with your friends you’ll feel better about your decision, as you’re working towards your goal that’ll help you with a better financial future.

*I went to the beach recently and have the ocean on my mind, so I hope you’ll excuse all my nautical references throughout!

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