3 Financial Milestones Everyone Should Aim to Achieve

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There are certain financial milestones that just about everyone should check off their to-do list. Find out if you’ve hit these milestones yet. 

Setting financial goals is often a personal process. Your desires may differ from those of other people. You may want to buy a home, for example, while someone else might want to rent and save up a huge travel fund.

While goal-setting needs to be done on an individual basis, there are three financial milestones just about everyone should try to achieve. Here’s what they are.

1. Becoming debt-free

Debt impairs your financial freedom. Everyone should aim to pay off their debt.

If you owe money, you’ll have a monthly payment you’re committed to making. As long as that payment exists, your income isn’t your own and you have less available for other financial goals. Plus, you’ll also be paying interest to a lender, which is money you simply lose as it goes to make your lender richer instead of helping you accomplish other financial objectives.

Some debts you should try to pay off right away because the interest costs are so high, like credit card debt. Others, it may not make sense to pay off early, such as a mortgage at a low rate since you can often get a better return on your money by investing it.

But even if you’re not paying extra toward your debt, your long-term goal should be to own your assets outright and not owe money to anyone. This is a key step in eventual financial freedom since you can’t be free while you still owe others.

2. Saving enough for retirement

Saving enough money for retirement is another crucial goal everyone should fulfill. Eventually, everyone will need to stop working and, when they do, they’re going to need money from a brokerage account or other investment account to live on.

See, Social Security retirement benefits are only meant to replace about 40% of pre-retirement income. It’s virtually impossible to maintain anything close to the standard of living you’re used to while taking a 60% cut to your income. You’ll typically need at least 80% to 90% of your pre-retirement money to live a comfortable life as a senior, so around 40% to 50% of that has to come from savings.

To figure out how much to save for retirement, assume you’ll need about 10 times your final salary invested. You can figure this out by taking your current salary and adding a 2% raise from now until your projected year of retirement. Then multiply that number by 10 to see how much you’ll need. From there, use the Investor.gov calculator to see how much you need to save monthly to reach that goal.

If you hit this target and save enough for your future, you can enjoy your golden years free of financial worries. That’s something everyone should aspire to.

3. Having a three- to six-month emergency fund

Finally, the last goal everyone should try to achieve is having an emergency fund with three to six months of emergency expenses in it.

Emergencies can and do happen to everyone. In fact, Pew Trusts found about 60% of households had experienced a financial shock in the prior year. Having an emergency fund can turn these financial shocks from a crisis into a mere annoyance since you have the money to pay for them.

To make sure you have enough emergency savings, open a high-yield savings account and set up automatic transfers to it each month of as much as you can afford. You can also save windfalls like tax refunds or cash birthday gifts until you have three to six months of expenses saved.

RELATED: Emergency Fund Calculator

By achieving these three milestones, you’ll be well on your way to a financially secure future. Get started working toward them today!

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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