November 22, 2019

Setting Financial Goals for Your Future

Setting short-term, mid-term, and long-term financial goals is an important step toward becoming financially secure. If you aren’t working toward anything specific, you’re likely to spend more than you should. You’ll then come up short when you need money for unexpected bills, not to mention when you want to retire. You might get stuck in a vicious cycle of credit card debt and feel like you never have enough cash to get properly insured, leaving you more vulnerable than you need to be to handle some of life’s major risks.

Annual financial planning gives you an opportunity to formally review your goals, update them, and review your progress since last year. If you’ve never set goals before, this planning period gives you the opportunity to formulate them for the first time so that you can get—or stay—on firm financial footing.

Here are goals, from near-term to distant, that financial experts recommend setting to help you learn to live comfortably within your means and reduce your money troubles.

Short-Term Financial Goals

  • Establish a Budget
  • Create an Emergency Fund
  • Pay off Credit Cards

Mid-Term Financial Goals

  • Get Life Insurance and Disability Income Insurance
  • Pay off Student Loans
  • Consider Your Dreams

Long-Term Financial Goals

  • Estimate Your Retirement Needs
  • Increase Retirement Savings With These Strategies

Bottom Line

You probably won’t make perfect, linear progress toward achieving any of your goals, but the important thing is not to be perfect but to be consistent. If you get hit with an unexpected car repair or medical bill one month and can’t contribute to your emergency fund but have to take money out of it instead, don’t beat yourself up; that’s what the fund is there for. Just get back on track as soon as you can.

The same is true if you lose your job or get sick. You’ll have to create a new plan to get through that difficult period, and you may not be able to pay down debt or save for retirement during that time, but you can resume your original plan—or perhaps a revised version—once you come out on the other side.

That’s the beauty of annual financial planning: You can review and update your goals and monitor your progress in reaching them throughout life’s ups and downs. In the process, you will find that both the small things you do on a daily and monthly basis and the large things you do every year and over the decades will help you achieve your financial goals.

to read the full article, visit Investopedia.