Financial goals are savings, investment, or spending targets you hope to achieve over a set period. These goals help you visualize the future you want and are the first step to achieving that. When you have a clear picture of what you’re aiming for, working towards your target is easy. That means that your goals should be measurable, specific, and time-oriented.
Today, we are unpacking how to set financial goals. What questions you can ask yourself as you pen down your goals.
When penning down your goals, keep in mind that they will fall under short, middle, or long-term goals.
Short-term financial goals take under one year to achieve, like taking a vacation, creating your emergency fund, or buying a new phone.
Mid-term financial goals can't be achieved right away but shouldn't take more than five 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 or a comfortable retirement.
Categorizing your goals will allow you to prioritize and help you create a plan for achieving these goals.
Prioritize each of your personal financial goals in order of importance, and then determine how long you have to save for each of them.
Be sincere with yourself. Do you need a new phone, or is saving in your emergency fund more critical? If one thing the Covid pandemic has taught us is that we should always be prepared for the uncertain.
So always prioritize your needs and keep track of your wants to reach your financial goals.
Nice! You've noted down and figured out what you want to achieve.
The next step is to figure out how much you'll need to save per month to achieve your financial goals.
Don't be discouraged if the amount is overwhelming. The important thing is to have a set of tangible financial goals to work toward.
On a monthly or quarterly basis, review your progress and continue to refine your plan. If you aren't meeting your goals, revisit your financial budget to see if there are any areas where you can cut expenses to free up money for savings.
Ensure you estimate how much interest or capital gains you'll expect to see in the accounts where you are saving your money.