Everyone’s circumstances are different when it comes to personal money and making financial goals. Regardless of your neighbour’s, family’s, or friend’s circumstance, you need a plan that will address your individual concerns whether you’re comparing bills, rent, debts, or lifestyle.
What are financial goals?
When it comes to money management, a financial goal is a target to shoot at. Saving, spending, earning, even investing can be a part of it.
The first step in making a budget is to make a list of financial objectives. Working toward your goals is simple when you have a clear image of what you want to achieve. That means your objectives must be measurable, detailed, and time-bound.
Types of Financial Goals:
There are three types:
– Short-term goals
– Mid-term goals
– Long-term goals
1. Short-term goals
Short term goal is the type of goal which takes less than a year to achieve. They can be travelling to some destination, buying some stuff or paying off a specific debt.
2. Mid-term goals
Mid-term financial goals are aims that you cannot achieve right away. However, they should not take too many years to accomplish. They are a little bit more expensive than your everyday goals, but they are still achievable with hard work and discipline. Examples may include graduating from college, paying off the auto loan.
3. Long-term goals.
Long-term goals usually take more than five years to achieve. This is the reason why they require longer commitments and more money. Saving for retirement, striving for homeownership, saving for a child’s college education can be your long-term goals.
Achieving Your Financial Goals
When it comes to saving money to achieve your financial objectives, you must think about the finest places or methods. It is possible for everyone to achieve their financial goals. Determining financial goal based on their type is very helpful in financial planning. Everyone wants to have financial freedom. Having clear financial goals is the path to financial freedom.
By having a financial goal, a person can also determine how much investment risk he can afford. Because different goals might have different ways to achieve them. Usually, a person will not take a high risk to achieve a short-term financial goal. On the other hand, someone might willing to take high risks for long-term investments. Regardless of all the risks involved in investing, to achieve financial goals, someone must understand the financial decisions he makes.
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