Step 1: Setting My Financial Goals
Setting financial goals is an important step to achieving financial well-being and maximizing the benefits of being an ABLE account owner. Setting your financial goals is the first step in creating a roadmap to a better financial future. You might be thinking, “I am not sure what my financial goals are or if my financial goals are realistic in my situation.” Don’t worry — these are common thoughts almost everyone experiences when they begin to create a financial roadmap. To get you started, this page provides some tips to help you identify your financial goals.
Topics at a Glance
What is the difference between “long-term” and “short-term” financial goals?
Short-term financial goals generally take a year or less to achieve. An example might be saving $500 for an emergency wheelchair repair. Long-term financial goals are those that take a longer period of time to accomplish, usually five years or more. An example is setting a goal to purchase an accessible vehicle.
Once I identify my short-term and long-term financial goals, how will I decide which ones I should work on?
As you begin to identify your goals, write them down and include what achieving that goal will mean to you in terms of increasing or maintaining your health, independence and/or quality of life. At the end of the week, spend some time reflecting on which goals are short-term and which are long-term. Then rank the goals in order of importance to you. Once you have identified your financial goals and ranked them, it is important that you begin to create a plan for how you will achieve your goals. Consider using the “STAR” method.
What is the “STAR” method, and why is it important?
The “STAR” method is a tool that can help you set financial goals and stay motivated to accomplish them. “STAR” goals are …
- SPECIFIC – Define what you want to achieve.
- TIMELY – When do you want to achieve the goal?
- ACTION ORIENTED – How will you achieve the goal?
- REALISTIC – Is the goal attainable?
- Deposits into an ABLE account are not allowed to exceed $15,000 in any given tax year. In addition, ABLE account owners who work under the ABLE to Work Act may contribute up to an additional $12,760 (2021) of their gross income into their ABLE account if they do not participate or contribute in a retirement plan within the same calendar year. Residents of Alaska can contribute up to $15,950 and residents of Hawaii can contribute up to $14,680. The total combined account limit, over time, is subject to state-specific limits for education-related 529 savings accounts. State ABLE plan limits range from $235,00 to $529,000. In consideration of the annual contribution limit per calendar year, accounts may reach that state limit over time.
- Over 44 states have launched ABLE programs.
- You are allowed to open an ABLE account outside your state of residency.