Last time you checked, you carried no credit card balances, had six months of take-home pay saved up in your emergency fund, and had been steadily increasing your retirement contributions every year.
Congratulations! You’re one of the lucky, financially diligent few who have your basic financial security numbers—that is, retirement, credit card debt and emergency savings—under control, and you deserve a big pat on the back. But the big question remains: Now what?
For starters, you should make sure you’ve really met those financial security needs. This means that on top of having six months of net pay saved up in an emergency fund and zero credit card debt, you should also consider being on track to replace about 85% of your income in retirement through regular contributions to a retirement account.
If that still sounds like you, that means you’ve likely got a cash stash that you’re trying to figure out a use for. Before you decide to start living a little larger, check out these four ideas for your extra dough from LearnVest Planning Services CFP® David Blaylock. They just might give you some options for smart decisions about your spending and saving.
1. Set New Financial Goals With Timelines
The basic financial security goals are similar for everyone. But beyond that, the plans you have for your money are all yours. What do you need and want in life? What is worth saving for next? Your answers to these questions can help you get started on financial goal-setting, the process by which you figure out which goals to focus on first based on what you want, when you want it.
“We always have goals beyond [basic financial security],” says Blaylock. “It could be college savings. Maybe we’re looking to purchase a home [and need the] down payment. Or maybe it’s saving for something special, like a large trip, a wedding or a new vehicle. Those are some common ones I see. Some people even want to save up to start their own business. There’s always a next-in-line goal.”