What is that you want to do in future? To many people the list is long. For you to accomplish any of these, you need to set financial goals. Financial goals will help you prioritize and also give a clear picture of what you are to achieve within a given period of time.
Define Financial Goals
Financial goals are savings, investment or spending targets you hope to achieve over a set period of time. The stage of life you’re in usually determines what type of goals you wish to achieve.
Creating a list of financial goals is vital to creating a budget. 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.
Types of Financial Goals
There are three types of financial goals.
Short term Financial Goals
These are financial target that can bee achieved within one year. This may include things like buying a computer, taking your family for vacation among others.
Mid-term Financial Goals
These are goals that may take about 5years. They are also achievable with discipline and hard work. This includes things like paying your credit card debts, saving for a down payment on a car.
Long-term Financial Goals
These are goals that can take more than five years to be achieved. Examples are: saving for your children education and saving for your retirement.
The following are Example of Financial Goals
1. Make a Financial Budget
Some are skeptical of the budgeting process. “Budgets are focused on debts and expenses and nobody got rich by focusing on their debts,’’ said Ric Edelman, a certified financial planner who is the author of eight books. “You get wealthy by focusing on your assets and your income.’’ But most experts agree that budgets are useful, if only to clearly define the amount of income and fixed expenses in someone’s household. Creating a budget is a great way to know your financial limits.
2. Stock your Emergency Fund Kit
It is important to prepare for unpredictable occasions in life. Saving for emergencies is a goal that will help you stick to your budget all the time. Whatever qualify as an emergency varies from one individual to another. Some of the emergency includes: job loss, car repair, medical expenses and accidents.
When such emergencies occur, emergency fund will keep you from suffering financial blow.
How much you save toward an emergency will vary. Statistically, it takes 9 months on average to find a new job after a layoff. With this in mind, it is in your best interest to save roughly 9 months’ worth of income for emergencies.
3. Pay Off your Debts
You can ever feel comfortable if you owe other people some money. Paying debts gives you some life freedom. Paying other people debts should be a financial goal for every person. Find some ways to clear these debts. Maybe you can make some monthly payment.
Making real progress in repaying the debts, requires you to stop borrowing. Additional debts will push you away from your goals.
4. Save for your retirement
Saving for retirement gives us the capacity to reach our long-term financial plan. you should set aside some money every month to grow your retirement portfolio. By the time you retire you will have accumulated enough for use that time you will not be working.
Know your retirement needs, calculate the amount to save every month. Setting up a 401(k) or another retirement plan is the most lucrative way to save for your future. Remember, the earlier you start, the better off you’ll be in the end.
5. Have Multiple streams of Income
Having a job does not mean that you cannot engage in other activities that can earn you more money. You can work during your free time or weekends. Multiple income stream is a form of income insurance.
Extra income from your side hustles can be of use in the following ways.
You can use the money to pay off your debts
The fund can be used to fund your retirement savings
You can use the money to start a new business.
You are able to build an income portfolio meaning you are not dependent on a single stream of income.
6. Live below your earnings
Living with your expenses less than your income is a necessary financial goal. This means that you will have extra income that you can save, invest and also improve your standard of living.
Achieving the above financial goals is easy when you follow the plan. Every one can do more to plan for their financial future. It is achievable with some commitment.