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Beginner's Guide to Investing

Lesson 5 of 12

Setting Financial Goals


Beginner's Guide to Investing

Lesson 5 of 12

Setting Financial Goals


Lesson Info

Setting Financial Goals

What, are you even ready to get started? So I did a little bit. We're talking ahead of time, but raise your hands if you currently are investing in some form, which is awesome. And I think what happens a lot of times is you realize, Hey, this is an important thing. I know we need to do this. This is part of adult ing, but I have a lot going on on the flip side, sometimes people get over eager and they start aggressively investing when they haven't figured everything else out yet. So we're going to go through this checklist that I've devised for you to determine whether or not you're actually ready to be investing. No, I do want to call something out really important up top here. When we're talking about investing, there's two ways to think about it. There are retirement accounts, which are tax advantaged accounts. When you're investing for retirement, you're getting a break in your taxes, either now or in the future when you take your money out, depending on if it's a Roth or tradition...

al. Don't worry, I will further explain those if you don't know those terms, but you're getting a tax advantage. Now the other thing that we like to talk about when we come to investing are taxable accounts. So these are two different types of accounts. You should be investing for retirement. I'm going to talk about it time and time again when we're going through this checklist. What I'm really referring to are using taxable accounts. So that's investing in a way that's not specifically for retirement. It's either. Maybe you're buying individual stocks. Maybe you're buying index funds, and mutual funds may be using a robo advisor or an app. But it's something that's more of a medium to long term goal. That's not retirement, so that if you wanted to sell that tomorrow, you could You would have to pay some taxes on it. But there's not gonna be any sort of tax penalty for doing so. If you right now wanted to sell something out of your retirement account, getting get hit with a penalty. So it's important to understand when I say a taxable account taxable investing account. Those are really what I'm referring to going through this checklist and I will keep clarifying that point as we go the very first part of this checklist sounds super easy. You have to set a financial goal. Does somebody want to share a financial goal that they have in the next five years? Come on, someone can do it. Yeah, with just so then the next five years, she wants to purchase the car. To me, that would be an example of a short term financial goal. We have to sit down and write down short, medium and long term goals, usually short were saying 0 to 3 years. But if you have a hard deadline of five, I wouldn't invest any of the money that you want for that car that you want to buy. Medium. We're usually talking about 4 to 10 years long term goals being 10 years. Plus, it sounds so easy to set financial goals. Honestly, it could be a little hard because you have to be very prescriptive. You have to sit down and think about a timeline, and you have to think about how much money it's going to take for you to get there. And the reason this is gold. This is thing number one on the checklist is because the goals that you have dictate everything when it comes to your investments, the type of investments you're gonna buy, how much risk you're gonna put on your money That's all dictated by your goals. Without step one, you're not ready to invest yet to master and cash flow. The less sexy term is the B word budgeting. So if this is something that causes you a lot of angst, I would really encourage you actually to go back to my first class. So get your financial life together. Boot camp. We have a very long intensive section on. Budgeting goes into a lot of details about different styles, but you have to mask your cash flow before you're allowed to invest because you need to know how much money is coming in and how much money is going out without that information. You cannot make any decisions because it's essential for you to have a nitty gritty of exactly how much money you have at your disposal before you are making any sort of choices about investing. The other thing is, can you easily pay all of your bills every month if you're in the scraping by phase or the paycheck to paycheck cycle phase, you are probably not ready to be investing. I'm gonna take probably out you're not ready to be investing and again go back to the get your financial life together. Boot can go through that first and then you'll be ready. Toe Learn. Well, you should learn more, but you'll be ready to take on investing afterwards. Next is the Almighty Emergency Fund. It's a really essential thing for you to have of emergency fund before you start investing. And the reason I say that is because things are going to happen in your life. Well, no, it we've all been through it. I do not want you to be investing your emergency fund. Sometimes that could be a controversial opinion. The reason I wanted to be We call it liquid, easily accessible and principal protected all jargon. Terms were saying, Put it in a savings account and let it grow there. And the reason I don't like to invested at all. I don't even like a low risk quote unquote investment, because when you need that money, you need it now most of the time, and also it feels like your car breaks down and your doggies a bag of brownie mix the same time that the market goes through a correction and you're gonna lead losing a lot of money if you sell those investments. That's why I like to say, Put that money somewhere where it's protected now the emergency fund rule of thumb. This is what often stresses people out 3 to 6 months worth of living expenses need to be saved up before you are ready to take on investing. But I want to talk about what that means because a lot of times I think we hear that number, and it sounds so big and so stressful. It's not at your current lifestyle. It's at your bare bones lifestyle, so it's not you getting to go out to eat and hang out with your friends and grab lunch out when you need to. It's my bills are paid, my lights are on rent or my mortgage is covered. My transportation is covered. I can pay any of the debts that I have. It's that number. Whatever your bare minimum number is, that's what you need. 3 to 6 months off. Now, if you want to kick it up a little bit, so you can keep your current lifestyle totally your call. But I like to mention that because it takes a little bit of the stress off of how big that number feels like it can get. And you want your consumer debt paid off. When I say consumer debt, I'm really talking about credit cards. Also, if it's a payday loan or a title loan, anything with that really nasty high interest rate, we want that stuff gone. Credit cards usually have between a 15 to 30% a PR on them. I'm going to be totally honest with you. The odds of you consistently getting those kind of returns in the market are nuts. It's probably not gonna happen again. I think I can take out the word, probably. So you want to be paying off all of your consumer debt before you focus it all on investing. So if you have credit card debt, knock that sucker out student loans. This is a little bit of a different animal, and we get into the debt section. We're going to talk about some of the nuances of whether or not you can be investing while you're paying down your student loans the thing. I like to think about it. It can take you 10 2025 plus years to pay those off. Let's think back to Leslie and Ben. Ben waited years to start investing, and he doubled down how much he was putting in and still couldn't catch up. So, in your student loan life, if you're waiting until you have them totally paid off before you start investing even into a retirement vehicle, that's really gonna put you at a disadvantage. So I think that it is important to consider this a balancing act. But you need to be current on your student loan. So nothing and delinquency, nothing in default. You need to be making sure those payments are happening every month. Then you gotta prepare for those short term goals. Think back to gold One. What are the things that you want to be doing in 0 to 3 years? Because you need to make sure that you have the cash flow set aside for when those things come up and this is outside of your emergency fund. So examples of this, I think, is when your car starts to make those odd noises, you know you're gonna need a new car soon. My husband and I just moved recently. That's really expensive dream of seriously a mile up the street, and it's still so expensive to move. And again, you know, you never know what's gonna happen with a medical expense. It could be anticipated or not. So it's good to make sure that you are prepared for anything that's on the horizon, especially things that you know we're going to come up Number seven ZZ. You're doing it right now. If you're watching online or if you're sitting here in the class, you are taking the time to educate yourself about the market. And that's such a crucial part of learning how to be an investor and number eight as you start preparing for retirement. I talked a little bit in the beginning about the difference between taxable accounts and retirement vehicles with her tax advantaged. I hate that we say, save for retirement. I think that's a misnomer. And the reason At the beginning, before we started the class, I said it, show your hands if you're an investor and not everybody's hands went up and I'm curious for the people who didn't raise their hands. If you have a 401 K or an IRA or some sort of retirement vehicle, because if you do, you're investing. But we don't think about ourselves as investors, and I think part of it is the language that gets used. You're saving for retirement. But truthfully, you're investing for retirement and it's really important because language has power to remember that, because I think it makes us feel a little bit better. You know more in control of our investing lives, but make sure if you have money in any of those retirement vehicles that it's actually invested. We'll talk about that a bit at the end when we talk about retirement. So go through all of this checklist and you might be feeling like, uh, still too much of a broke millennial to get started, And that's totally okay. If you were in a situation where credit card debt is still nagging at you, maybe your emergency fund isn't there yet. At least you're taking step number seven and you're educating yourself. So win that credit card deck. It's paid down. When your emergency fund is on point, you are immediately ready to get started in the market. And while you're going through all of this, please make sure to take advantage of for one case or IRAs. Please be investing for retirement, especially if you have the option of an employer match. We'll talk a little bit more about that later.

Class Description


  • Create an investment plan that’s right for you and your budget
  • Build your net worth through stocks
  • Know the basics of investment terminology
  • Create short, medium, and long term financial goals
  • Understand your company’s investment options


Exchange-traded funds. Brokerages. Asset allocation.

Most people want to start investing, but have no idea where to begin. How much do you need to start? How do you know if you’re taking the right first steps? In Beginner’s Guide to Investing, author and financial expert Erin Lowry breaks down the obtuse language and lays out your investment strategy options. Learn the common misunderstandings, set your financial goals, and take strategic steps no matter your starting amount, time frame or business context -- Erin has you covered.

Don’t let beginner’s paralysis get in your way; Erin provides you with the knowledge and tools for financial literacy. Learn the basics of investment terminology, the stock market, saving for retirement and everything you need to feel confident to start growing your wealth.


  • Young professionals


Erin Lowry is the author of Broke Millennial: Stop Scraping By and Get Your Financial Life Together and Broke Millennial Takes On Investing: A Beginner’s Guide to Leveling-Up Your Money. Her first book was named by MarketWatch as one of the best money books of 2017 and her style is often described as refreshing and conversational. Erin has been featured by The New York Times, The Wall Street Journal and USA Today and on CBS Sunday Morning, CNBC and Fox & Friends. When she’s not thinking or talking about money, Erin is planning her next travel adventure or probably looking up pictures of dogs. Erin lives in New York City with her husband.


  1. Class Introduction

    Meet Erin, self-titled “investing translator” and personal finance expert. In this lesson, Erin shares her background, addresses misunderstandings regarding investing, and lays out what you’ll learn in this course: how to know if you’re ready to start investing, must-know terminology, how to handle market ups and downs, retirement plans and more.

  2. Compound Interest in Action

    What is compound interest and how does it work to maximize your returns in any investment account? Erin shows you how compound interest works in your favor over two years, five years and beyond with clear examples.

  3. Time

    Why does time matter so much in terms of investing? Examine a case study with Erin to see how time functions with compound interest to yield higher returns.

  4. Inflation

    In this lesson, learn how investing just a little money can help you combat and even beat the inevitable effects of inflation.

  5. Setting Financial Goals

    What do you need to consider when preparing to invest? Erin shares a checklist to be sure you’re ready. Learn how to approach short-term and long-term goal setting, budgeting and setting up an emergency fund. Erin explains the difference between retirement accounts and taxable accounts.

  6. Must Know Terms

    Being a new investor can be intimidating -- as someone who approached the process without prior knowledge or a finance background, Erin lays out the must-know terminology in layperson’s terms. In this lesson, learn about how to diversify your investment portfolio, factors such as your time horizon and risk tolerance, and the difference between bond funds, ETFs, mutual funds, index funds and more.

  7. Fees

    Don’t let high management fees and fine print sneak up on you; learn how to vet brokerages when considering your investment options. Erin explains and advises on expense ratios, what to ask when considering contracting a financial advisor and where to find details on associated fees to ensure you’re getting value for your money.

  8. Quick History of Stock Market

    Financial downturns have been devastating, yet studying past market events can show us how to weather the storm. Erin gives a quick review of previous American stock market downturns and how to protect yourself when the market does go down.

  9. DIY Approach

    You’re ready to invest -- how do you start? What level of involvement do you prefer? Erin walks you through different options and factors to consider: investment advisors, discount brokerages, minimum deposits, roboadvisors and micro-investing apps.

  10. Investing with Debt

    Should you be investing with debt? Whether you have credit card debt or student loans, Erin advises on whether it makes sense to start investing or not.

  11. Retirement

    Why should your investment goals prioritize retirement and why should you start now? Erin walks you through questions to consider when opening a retirement account and explains the differences between the 401k, 403b, traditional IRA and Roth IRA.

  12. Picking Initial Investments

    In this final lesson, Erin advises on how to choose your investments and approach building your portfolio. She closes by sharing valuable online resources for further information such as calculating compound interest, opening a brokerage account and researching investment options.