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Financial goal setting is paramount for financial independence. Unfortunately, most people don’t establish financial goals or know how to set them.
64 percenr of Americans remain unprepared for retirement. Many of these same people don’t care until their retirement years draw closer.
Setting financial goals prepares you for any situation. You can get laid off or fired without any warning. Expenses can quickly rise, making the cost of living more difficult.
Goals keep you on the right track. We’ll discuss how to get started with your goal setting.
Short-Term Goals
Short-term goals have one to three-year timeframes. You may be saving up money for a home or car. These assets require a significant investment, but you can save up for the down payment.
Avoid risky assets for funds dedicated to short-term goals. The stock market has provided attractive long-term returns, but a single bad year can make short-term goals more difficult to reach.
Invest in lower-risk assets when a short-term purchase is on the horizon. Blue-chip stocks and bonds can give you a return on your investment. These returns won’t change your life, but some proceeds are better than nothing.
Calculate how much you need for the down payment or other expenses. Then, calculate the gap and create a plan to overcome it.
You have more control over short-term goals. You can track expenses and reduce superfluous costs. Asking for a raise or looking for a higher-paying job will also help with short-term goals.
Mid-Term Financial Goal Setting
These goals have three to 10-year time horizons. Investors can buy into riskier assets in exchange for a higher potential payoff. Everyone must assess their risk tolerance, but more risk is normal for this stage.
Career growth makes a big difference as well. You have more time to reap the benefits of a higher salary and compound growth.
Efforts in your short-term planning will affect your mid-term goals. The reduced expenses and higher income carry over to your three to 10-year horizon.
Long-Term Goals
Career growth plays a role, but investment strategy defines long-term success. Long-term goals come to fruition in 10 or more years.
Most people view retirement or college tuition as long-term financial goals. Choose an investment planner who will guide you on the journey.
Investors can take more risk, knowing they have time to steer through corrections. Your short-term and mid-term goals influence your readiness for long-term goals.
Long-term goals feel far away, but they can sneak up on you. Set a financial goals timeline to address each stage of your life. You’ll always have an upcoming deadline that will inspire smarter money decisions.
Embrace Financial Goal Setting
Financial goal setting makes you think more about your money. You’ll become more conscious of every dollar you spend and maximize savings.
Financial goal setting can also inspire you to ask for a raise and accelerate your career. You only have control over your income and expenses.
Strengthening these areas gives you more money to invest. Then, you wait for the money to grow.
Want to learn more about finances? Continue reading this blog for additional insights and resources.
