Financial Wellness: Five Goals For All Ages

May 28, 2021 in
By Justin Fuhrmann

Big Picture Goals

Finding the time and resources necessary to move forward with big financial decisions throughout a professional career can be a difficult challenge. Long term uncertainty about one’s financial wellbeing can be a major stressor in life, and nearly everyone wonders from time to time if they should be doing something differently with their money. Here at FMP Consulting, we work with our company’s 401(k) advisor, Dan Bender, a Certified Financial Professional from PB Mares, to prepare presentations throughout the year on a wide variety of financial topics to help employees make informed decisions about how to strive toward their financial goals and help to secure their financial future for both themselves and their families. As part of this effort, I have compiled five big picture goals to help provide context and resources behind some of the biggest financial decisions many of us will face throughout our life.

Some individuals are further along with these goals depending on personal circumstances. To avoid overgeneralizing, I have removed any suggestion of what age someone should be when pursuing these goals. Instead, think of these goals as something we should all strive for throughout our careers to ensure financial wellbeing. These goals are broken into two phases and within these phases the goals can be pursued one at a time or simultaneously, depending on your personal or familial circumstances.

Phase One: Credit Building and Saving

Goal #1: Build your credit score. Credit scores can feel like mythical numbers that rise and fall on a whim. In reality, there are specific factors that impact your credit score, and they fall into one of three categories of importance:

  1. High Impact:
    • Payment history: Pay your bills on time, every time! Even one late payment can impact your score so be mindful of due dates and set up automatic payments when possible.
    • Credit utilization: Using more than 30% of the credit available to you will negatively impact your score. Try staying below 30% utilization on all your accounts (e.g., If you have a Visa card with a $2,000 limit, do not use more than $600 worth of credit on that card.) Paying your monthly balance in full each month will also ensure your utilization stays low.
    • Derogatory marks: This includes accounts sent to collections or public records of bankruptcy filings.
  2. Medium Impact:
    • Age of credit history: It is important to open credit accounts in your name while you are young. You want to demonstrate a history of using credit responsibly. If you have old accounts you don’t use any longer, it is often better to leave them open and monitor them than it is to close them and lose some of your active credit history.
  3. Low Impact:
    • Total number of accounts: Lenders want to see that you have used a variety of accounts responsibly.
    • Hard inquiries in the past 2 years: These normally arise from credit card applications and mortgage or car loans. Their impact fades over time and eventually falls off over 2 years. Having fewer than 2 on your report is optimal, if you are over 5 it can start to adversely impact your score.

Consider utilizing Credit Karma as a free resource to track your credit score over time and be sure to make use of the free federally mandated credit reports available through the Federal Trade Commission’s Website and

Goal #2: Save 20% of your after-tax pay into savings. There are two types of savings to think about here, 1) building an emergency fund and 2) saving for retirement. Your emergency fund should be in a separate account than your regular checking and should contain funds that would be easily accessible in the event of an emergency. Setting up a high-yield savings account is a good place to put your money since most banks offer paltry interest rates on their regular savings accounts. Try to save up 3 months’ worth of living expenses with a long-term goal to save for 6 months of expenses.

As for retirement, the earlier you start, the better. Compounding interest takes time to show returns, but it can make all the difference to you meeting your long-term financial goals. Consider the following example illustrating the difference of saving $6,500 a year for retirement starting at the age of 25 versus 35 versus 45:

This chart shows an annual investment of $6,500 from the ages of 25, 35 and 45 until the age of 65. It assumes a steady return of 5%. This chart is for illustrative purposes only and is not meant to portray actual investments. There is no guarantee that the results shown will be achieved or maintained over any time period.

Phase Two: Building Upon A Strong Foundation

Once you have achieved the two goals listed above you will want to start thinking about these next three:

Goal #3: Spend no more than 33% of your income on housing (rent or mortgage) and no more than 8% of your income on transportation (car, insurance, gas, public transit). With rising housing costs across the United States staying under this target percentage can be difficult. For some individuals, you may decide spending a higher percentage is acceptable and you will cut expenses in other parts of your life, such as spending more money on your housing so you can walk, bike, or ride public transit to work to avoid the costs of owning your own vehicle. If you can’t get under these percentages, try to get as close as you can to ensure that you have enough left over to fund the rest of your expenses.

Goal #4: Put at least 15% of your income toward retirement. Goal #2 started you down this path, but once you have built your emergency account up to six months’ worth of expenses you should focus your savings on increasing funding for your future retirement. There are many endeavors that you can borrow money to fund throughout your life such as buying a home, buying a car, or sending a child to college. Retirement is not one of these expenses. Leverage employer retirement vehicles such as 401(k)s and 403(b)s for your savings or consider utilizing an Individual Retirement Accounts (IRA) and post-tax Roth IRA if employer plans are not available to you or you want increased flexibility with your investment options.

Goal #5: Save up enough for a down payment on property (if desired). In the Washington D.C. Metro area, and other highly desirable metro areas throughout the United States, saving enough to buy property of any kind presents a substantial challenge. Even if you believe you want to buy a property, you need to consider the following questions:

  1. How comfortable are you, and your family, if applicable, with staying in your present geographic area?
  2. How stable is your job? What about your partner’s job, if applicable?
  3. How stable are your family and friend relationships?
  4. Can you commit to staying at the same property for five years or more?

If your answers are, 1) I am comfortable; 2) My job is stable; 3) My relationships are stable, and 4) Yes, I can commit to five or more years at this property then homeownership may be the right decision for you.

If you decide you do wish to pursue owning your own condo, townhouse, or single-family home you will need to save enough to fund a down payment. Traditional mortgage financing with a 20% down payment is the most recommended option by financial planners, but there are other options if you have some money saved, but not enough to fund the full 20% of a property purchase. The CFPB has great information available to learn more about homeownership that you can learn about here.

Hungry For More?

Certified Financial Planner Cynthia Meyer wrote a 2019 article for Forbes with detailed checklists for different stages of an individual’s career (e.g., 20’s, 30-44). For those of you who are interested in a more specific checklist for each stage of your career you may find that information helpful. Achieving these five goals may come at different times for different individuals, and not all of these goals will fit the needs and circumstances of everyone, but working toward these goals can empower you on the path toward increased financial wellness.

What other financial goals do you have for yourself or your family? Share your thoughts about financial wellness with us on LinkedIn!

Justin Fuhrmann joined FMP in April 2015 and works with the National Geospatial-Intelligence Agency on policy analysis and formulation, employee benefits, benchmarking and interviewing. Justin is from Bergen County, NJ and now lives in Arlington, VA with his wife and three daughters. Outside of work you can find him skiing, hiking, or exploring the DC monuments.