This week the weekend challenge is to set long-term, mid-range and short-term financial goals. These goals are important as you move on to set up your budget. They can determine how much you should save and where you can splurge a little bit. Look at your environment and create a supportive environment to help you reach your goals. Your finances affect often life goals and so it is important to consider financial goals on a regular basis.
First, write down three long-term goals. These goals should be twenty to thirty years away. They may include your retirement goals as well as other financial goals that you may have set for yourself. It helps to set up a firm amount that you need to save in order to achieve these goals. For example I would like to retire sometime during my fifties and travel extensively. A good amount to save for retirement each year is fifteen percent of your gross income. This number can include employee matching programs.
Next, write down at least three mid-range goals that you would like to accomplish in the next ten years. Depending on where you are in life, you may include a home purchase or paying off your mortgage. Other worthwhile ten year goals may be starting your own business, or purchasing real estate investments. It may be long-term career changes that will take time achieve or an income level that you would like to reach.
Now it is time to focus on your short-term goals. These may be getting out of debt, saving for a vacation or a down payment on a house, funding your emergency fund, making a career change or increasing your salary. They may be as small and as specific as increasing your savings by $100.00 a month or cutting back on your grocery budget.
Finally, you need to go through and write down next to each goal three steps that you need to do in order to achieve that goal. For my retirement goal I need to contribute regular to my retirement savings. I also need to find other streams of income, such as rental properties, that I can rely on once I retire. Finally I need to set up a good financial plan to make sure that I reach these goals. I plan to focus on finding additional streams of income after I have accomplished other goals such as paying off my house.
It is important to realize that you will not take all of the steps you have listed this year, especially for your long-term or mid-range goals. Your short-term goals should be moving you towards reaching those goals. One goal everyone should consider is getting out of consumer debt. This frees up income and allows you to begin to save your money so that you can accomplish the things that are most important to you.
Next week, we will set up a financial plan and a budget that will help you reach these goals. In the meantime write them down and put them where you can see them on a regular basis. It is important to remember what you are working towards.