What are Financial Goals?
Financial goals are savings, investment or spending targets you hope to achieve over a set period of time. The stage of life you’re in usually determines what type of goals you wish to achieve.
For example, if you’re in college, it may be an easy short-term goal like saving for a new pair of shoes or something more challenging like saving for a car.
On the other hand, a person with a growing family would have a long-term goal of going from renting a home to owning one. Saving for a child’s college education and saving for your own retirement are other popular financial goals.
How to Set Financial Goals?
Here are six steps to setting financial goals.
- Figure out what matters to you. Put everything, from the practical and pressing to the whimsical and distant, on the table for inspection and weighing.
- Sort out what’s within reach, what will take a bit of time, and which must be part of a long-term strategy.
- Apply a SMART- goal strategy. That is, make certain your ambitions are Specific, Measurable, Achievable, Relevant, and Timely. SMART.
- Create a realistic budget. Get a strong handle on what’s coming in and what’s going out, and then work it to address your goals. Use your budget to plug leaks in your financial ship.
- With any luck, your tough, realistic, water-tight budget will show at least a handful of leftover dollars. Whatever that amount is, have it automatically directed into a separate account designed to address the first couple of things on your list of priorities.
- Monitor your progress. Make sure that you are hitting certain benchmarks. If not, take some time to re-evaluate what went wrong.
How to Achieve Your Financial Goals?
The best way to reach your financial goals is by making a plan that prioritizes your goals.
When you examine your own goals, you’ll discover that some are broad and far-reaching, while others are narrow in scope. Your goals can be separated into three categories of time:
- Short-term financial goals take under one year to achieve. Examples may include taking a vacation, buying a new refrigerator or paying off a specific debt.
- Mid-term financial goals can’t be achieved right away but shouldn’t take too many years to accomplish. Examples may include purchasing a car, finishing a degree or certification, or paying off your debts.
- Long-term financial goals (over five years) may take several years to accomplish and, as a result, require longer commitments and often more money. Examples might include buying a home, saving for a child’s college education, or a comfortable retirement.