What is a long-term financial goal?
What is a short-term financial goal?
A short-term financial goal is a goal that can be accomplished in the near future – from a month to two years. Short-term goals could include creating and sticking to your monthly budget. Saving for a down payment on a house or paying off a debt. Vacations are another short-term goal or buying a car or an expensive item like a big-screen TV or a boat. Many financial advisors say that your first short-term goal should be to eliminate any credit card debt!
How to create long-term and short-term goals
Everyone has different needs (aside from retirement) so goal planning can differ from person to person. The important thing is to look at your needs, dreams and priorities and decide what is important to you and then plan to make it happen.
- Identify what your priorities in life are. Do you need to buy a house, start a business or go abroad on a family holiday?
- Then divide up financial goals up into short-term and long-term financial goals and identify the amount of money you will need to save to make each goal a reality.
- Prioritise your goals. A new car might take priority over a holiday. A good tip is to make your retirement your first priority and establish how much money you plan to put away for that. Then look at your remaining money and earmark it according to your other financial goals.
- Establish how many years it will take you to achieve each goal and start saving accordingly.
- Look at your financial situation and any debt or loans you may have and plan on eliminating any debt that carries a high interest rate.
- Establish a financial plan that will help make your goals happen by setting up automatic contributions from your salary to your saving or investment portfolios.
- Adjust your spending habits in order to make your savings happen by cutting back on any unneeded spending or luxury items you can’t afford.
- Watch your investments closely and adjust your investments when you need to.
- Realise that the sooner you start to save the better. If you start saving for a long-term goal in your 20s it will produce a larger sum than if you only started to save in your 30s or 40s.
- If you find it difficult to put together a financial investment plan on your own, consider engaging an investment advisor to help you achieve your financial goals.