Setting financial goals in short, medium, and long-term planning is one of the key steps to financial success. It’s important to have goals, whether they are things you plan to achieve sometime in the future or habits and attitudes – you can improve your finances today, such as helping you save money and make investments.
In addition, if you do not work your finances with specific targeting, you are likely to end up spending more than you should, thus risking not having money to something unforeseen.
Short-term financial goals tend to be simple to achieve. On the other hand, long-term goals need to be more elaborate as they depend on well-designed financial planning. Know more
Short-term financial goals
These first steps are relatively easy to achieve, but they are already a big help to your finances and an important contribution to the medium and long term financial goals.
Establish a budget
First and foremost, it is important to know where your money is going. You can create an old-fashioned budget by reviewing your bank statements and past months accounts and sorting each expense into a spreadsheet. , or even on paper.
An easier way to track your expenses is to use online budgeting software. This kind of program can compile information from all your accounts in one place and organize your expenses into categories automatically.
Either way, a budget allows you to see what your essential expenses are, how your expenses compare to your income, what expenses can be reduced and how much you can save each month.
Create an emergency fund
An emergency fund is money that you set aside specifically to pay for unexpected expenses. For starters, somewhere around $ 500 to $ 1,000 is a good goal. Over time, it is good to expand it so that it can cover greater financial difficulties, such as unemployment.
Pay off your credit cards
Credit card interest rates are very high and can complicate your path toward set financial goals. Pay these bills in full and get out of the snowball of debt before it gets in the way of your planning.
Medium term financial goals
Once you have created a budget, established an emergency fund and settled your credit card debt, it is time to start working on medium-term financial goals. These goals will bridge your short and long term financial goals. Think about things you want to accomplish over the next three years, such as:
- take out life insurance and private pension;
- repay student loans;
- Think of your dreams, such as a trip, buying a property, a wedding, having one or more children.
You might even want to do all these things. However, keep in mind that working on many medium-term goals at the same time requires more thorough planning.
Long-term financial goals
The biggest long-term financial goal for most people is to save enough money for old age. The common rule is that you should save 10% to 15% of each salary through investments that make a good return. But to know exactly how much to save, you need to estimate how much you will spend annually after a certain age.
Setting financial goals in planning is crucial not to get off track. It is a practice that avoids excessive spending and debt. In the process, you will find that small habits cultivated over the years help achieve your goals.
And do you already have any idea what goals you will set in your financial planning? Reply in the comments!