As part of our recent focus on taking a more holistic approach to personal finances, let’s look at setting realistic and achievable short-term and long-term financial goals for yourself.
Having both types of goals fits in with creating a budget that can be used as a financial roadmap for your future. Think of the budget as being a car, and the short- and long-term goals as accessories. Although they may not be absolutely necessary to move the “car” forward, the goals can be very helpful in reaching certain milestones and keeping the “vehicle” headed in the right direction.
Your short-term goals would be ones that you want to accomplish over the next six months to a year. They might include:
- Setting funds aside for a summer vacation.
- Establishing a “rainy day fund” for emergencies.
- Buying a new cell phone or electronic tablet.
- Purchasing a new piece of living room furniture.
- Setting up a savings account for holiday gift purchases.
- Buying a new lawn mower.
- Purchasing a new set of tires for your car.
- Buying new holiday decorations.
- Paying off a credit card balance of $500.
As for your long-term goals? They’re usually ones that have a longer timeline – such as two years or more – and require a significant amount of financing. Examples include:
- Buying a new home.
- Purchasing a new car.
- Buying a vacation condo or similar property.
- Financing your children’s college educations.
- Buying a boat.
- Purchasing a new heating or air conditioning system.
- Building an addition to your home.
- Buying a new high-end bicycle.
- Getting a new roof on the house.
- Going on a two-week dream vacation to an exotic locale, such as a Caribbean island or a secluded spot in Europe.
- Making major home renovations.
- Establishing a retirement account.
Once you have established your goals, prioritize them. Then figure out how much you will need to save each month for each of them in order to reach those goals.
There’s a strong likelihood that your goals will change over time, so review them quarterly or at least twice a year and make adjustments if necessary. If you find that you aren’t in sight of reaching some of your goals, go back and review your budget and see if there are any tweaks you can make to free up additional money.
Don’t be discouraged if you find that you have a few goals that aren’t realistically attainable. Just keep moving forward with the ones that are and appreciate the sense of accomplishment you’ll feel with each one you achieve.