Table of Contents
Chapter 1: How to Determine Your Financial Goals
Chapter 2: Setting Priorities to Reach Your Financial Goals
Chapter 3: Short Term Goals vs. Long Term Goals
Chapter 4: Focus on Feasible Financial Planning Goals
Chapter 5: Review Your Financial Goals Periodically
Chapter 6: Tracking Your Financial Planning Progress
When developing your financial goals, remember that the basic idea is to create a set of advantageous personal circumstances in coming years. So, what you think is important for your later life gets importance when developing goals.
However, you also need to remember that there are some goals that need to be accomplished earlier, such as higher education for a teenage child or necessary home repair or renovation.
At any time, you will have both short term and long term goals to work towards. Any goals that need to be achieved or can be achieved within 2 to 4 years fall in the short term category. Others go into the long term category.
Assessing Long and Short Term Goals
Typically, long term goals are also those that need more financial resources and are more difficult to quantify than short term ones. For example, a long term goal like a retirement fund should be able to pay your living expenses throughout your retired life. You cannot predict the length of your post retirement life or how inflation will have affected cost of living by the time you retire.
So predicting exactly how much you need in your retirement fund is more complex than, say, setting up a college fund for your child. With the latter, you have a much clearer idea of how much you will need.
Your long term goals need to be at the back of you mind constantly so that you work steadily and consistently towards achieving them. Short term goals keep changing. As soon as some short term goals are achieved, others arise to take their place.
With long term goals, it is a good idea to review if you have the necessary resources or qualifications to achieve them. This helps in two ways. One, you steadily work towards and gear up for your goal over a period of time. Two, it helps you break up a long term goal into smaller steps that ultimately lead you to the achievement of the long term goal.
For example, a long term goal of buying a house needs a good credit history as it will affect your mortgage rate. Working towards improving or building the credit score can be the short term goal that ultimately helps achieve the long term goal of buying a house.
When it comes to gauging the funds you need to meet short term goals, you can base your estimate on a calculation of what achieving the same goal costs at present. Factor in inflation and you have a fair idea of exactly what your target is.
Next Chapter: Focus on Feasible Financial Planning Goals