Goal setting is something we learn about in school and most people find the concept quite boring. However, when it comes to your personal finances, goal setting is one of the most important and useful activities you can do.
When we set goals, we set intention and establish a clear direction to follow. Without goals, we really are just wondering around in the dark and we quite literally cannot afford to navigate the financial world with blindfolds on.
In this article, we talk about why setting clear financial goals is the most important thing you can do when pursuing financial independence.
There are three main types of financial goals that you can set: short-, mid-, and long-term goals. Although these are ultimately separate from each other, they are closely linked. We can look at them as stepping stones, each one leading onto the next.
Generally speaking, short-term financial goals should take less than 3 years to accomplish. This can include saving enough money for a dream holiday, to renovate your home, or to pay off your car. Another short-term goal may be to pay off all your bad debt once and for all.
These should take anywhere between three and ten years to achieve. This can be saving enough money for a deposit on your first home, or to start a business. You may also want to save enough money to pay for your child’s university fees, or to finally pay off your own student loan.
Long-term financial goals usually take longer than ten years to achieve. This can be making sure you have enough money to retire comfortably, or to finish paying off your bond.
Based on the different types of financial goals, it’s easy to see why we cannot just focus on our long-term goals. If we don’t look at our short-term goals which help us get rid of bad debt and improve our spending habits, comfortable retirement may be impossible to achieve.
Although it’s important that we look far into our futures so that we know where we are going, we will never get there unless we look at what we are doing today, and what we should be doing tomorrow. In other words, our short- and mid-term goals are the stepping stones to achieving our long-term goals.
Once we have all our goals in place, we can develop a sound financial plan with personalized strategies to help us achieve them. Think of your goals as a roadmap to success.
Setting financial goals can feel like an overwhelming task, especially when you don’t have a handle on your current finances.
Let our financial advisors help you establish a clear path to a stable financial future.
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