Short Term Financial Goals vs. Long Term Financial Goals

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

  • Moeketsi

    What are short term goals of businesses?

    • Daniel Stone (ADMIN)

      Hello Moeketsi,

      That’s actually a good question. I would rather not get into here since this series is about personal finance of an individual (not business). What I will do is write another short services about short term and long term business goals. Please allow me a couple weeks as I have some other articles I’m working on now.

      Thanks,
      Daniel

  • Ken McColloch

    OWNED! Don’t mind me I’m just trying to write a forum article in my business class.

  • Daniel Stone (ADMIN)

    While you’re entitled to your own opinion Shirley it doesn’t mean I value it or that it even makes any sense. I feel no need to get in an argument with you because I know mine is bigger.

    The tutorials or articles I have written comprise of many years of extremely successful investing. In fact call it arrogant if you will but it’s allowed me to be financially free since the age of 22.

    You can’t please everyone and that is not my goal. All I’m doing is sharing what I know and I don’t claim to be some investing guru or investing prophet. You came to this website on your own free will and can leave just as easily.

  • Shirley Bender

    What kind of crap statement is that opener? …”create a set of advantageous personal circumstances”… There’s something arrogant about this statement, as if an individual is all powerful. Instead of dealing with people as having instincts for self preservation, this arrogant asshole deals with people as having to have ulterior motives and “planning” abilities.

    sebender7@aol.com