The beauty of dreams is that each one is completely unique to its holder. Some people know they want to start a family, including the total package: marriage, home ownership, children, pets and the financial means to make it all happen comfortably. Others yearn to travel the world, which means they’ll need the cash to finance international jet-setting, lodging, and other incidentals. Some people want to pursue higher education, earning anywhere from a bachelor’s degree to a master’s or even a PhD—all of which will typically require some sort of financial investment.
The point is, no matter your dream, you’ll need to bring your financial situation in accordance with your short- and long-term life goals.
Set Concrete Financial Goals
Rather than viewing your finances as background noise compared to your life goals, think of them as two parallel lines. Just as you have a timeline for how and when you hope to achieve your life goals, you should also have a timeline for your finances complete with helpful milestones to guide your progress.
Here are a few examples of short-term goals on which you might choose to focus first:
- Create a budget: Track your income vs. spending habits and create a livable budget accordingly. Then stick to it.
- Start an emergency fund: Store enough money to support yourself for at least a few months should you lose your source of income unexpectedly.
- Pay off credit card debt: High-interest credit card debt stands as a barrier between you and your dreams, so focus on paying these off in a timely manner.
Taking these steps will help pave the way for your dreams, whether you want to build a new home, create a college account for your child, retire early or turn your side-hustle into a business. For example, it’s tough to achieve forward momentum if you’re carrying $25,000 in credit card debt and operating without an emergency fund.
In a case like this, a consumer may choose to pursue debt settlement through a company like Freedom Debt Relief in hopes of negotiating down the amount owed to creditors. Through budgeting, this person could also streamline expenditures and reroute additional income to growing an emergency fund—thereby protecting themselves against accidents that, without proper financial padding, can easily derail dreams. From there, long-term goals can follow, including planning for retirement.
How Debt Delays Dreams
In order to better understand exactly how debt is delaying dreams for many consumers, it’s helpful to turn to the data. As the New York Times reports, people under 35 years old headed 41 percent of U.S. households in 1982. As of 2018, that statistic had fallen to just 35 percent. Why? Well, young people are living with relatives longer due in part to skyrocketing student loan debt. Those millennials who do move out are increasingly renting in cities because the cost to buy is simply out of their price range for the time being, due in part to ongoing debt.
Over 40 percent of U.S. households have some amount of credit card debt. The average balance? $9,333, according to statistics from ValuePenguin. Credit cards can be very useful in building credit and allowing consumers to make large purchases without having a lump sum of cash ready to go. But they can also contribute to deferred dreams, especially because their high-interest rates continue to compound debt, even if consumers are making faithful minimum payments.
Anyone who wants to live their dreams must first figure out how to tackle their debts by aligning financial goals with broader life ones.