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Financial Goal

A financial goal is a target related to managing money through saving, spending, earning, or investing. There are short-term goals that can be achieved in a year, mid-term goals that take around 5 years, and long-term goals that take more than 5 years. Examples of common financial goals include starting an emergency fund, paying off debt, saving for retirement, achieving homeownership, paying off a car loan, investing in education, and planning for fun purchases.

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Manu Thakur
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564 views3 pages

Financial Goal

A financial goal is a target related to managing money through saving, spending, earning, or investing. There are short-term goals that can be achieved in a year, mid-term goals that take around 5 years, and long-term goals that take more than 5 years. Examples of common financial goals include starting an emergency fund, paying off debt, saving for retirement, achieving homeownership, paying off a car loan, investing in education, and planning for fun purchases.

Uploaded by

Manu Thakur
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Financial Goal

A financial goal is a target to aim for when managing your money. It can
involve saving, spending, earning or even investing.

Creating a list of financial goals is vital to creating a budget. When you have a
clear picture of what you’re aiming for, working towards your target is easy.
That means that your goals should be measurable, specific and time oriented.

Types of Financial Goals


There are several types of financial goals:

• Short-term goals
• Mid-term goals
• Long-term goals

Short term financial goals

These are smaller financial targets that can be reached within a year. This
includes things like a new television, computer, or family vacation.

Mid-term financial goals

Typically, midterm goals take about five years to achieve. A little more
expensive than an everyday goal, they are still achievable with discipline and
hard work. Paying off a credit card balance, a loan or saving for a down
payment on a car are all mid-term goals.

Long-term financial goals

This type of goal usually takes much more than 5 years to achieve. Some
examples of long term goals are saving for a college education or a new home.

7 Examples of Personal Finance Goals


Still not sure what to aim for? Here are some personal financial goal examples
to help get you started.

1. Start an Emergency Fund

Life is unpredictable, and it’s important to be prepared. Saving for emergencies


is one of the only goals that is a necessity. It should be the first one you should
set, regardless of your situation.
It’s up to you to decide what qualifies as an emergency. There are a lot of
different situations that can fall into this category, including:

• Medical expenses
• Job loss
• Accidents
• Broken appliances
• Car repair

When something unexpected and expensive occurs, emergency funds are there
to keep you from suffering the financial blow.

How much you save toward an emergency will vary. Statistically, it takes 9
months on average to find a new job after a layoff. With this in mind, it is in
your best interest to save roughly 9 months’ worth of income for emergencies.

2. Pay Off Debt

Paying off debts is one of the most common financial goals. No one feels
comfortable knowing that they owe large sums of money. And because the
amount you owe is already a specific number, paying off debt can easily be
translated into a financial goal.

In addition to making every monthly payment, the best way to make real
progress is to stop borrowing. Adding to your debt will only push you away
from your goal, so it’s important to stay strong and diligent. In some cases, this
goal is probably a mid-term goal, but there are ways to get out of debt fast.

3. Save for Retirement

Saving for retirement is a goal you may be working towards your entire life. It
is the perfect example of a long term investment.

It is important to consider exactly what your retirement needs are. Setting up a


401(k) or another retirement plan is the most lucrative way to save for your
future. Remember, the earlier you start, the better off you’ll be in the end.

4. Strive for Homeownership

Buying a home is a common long-term financial goal. Whether you’re saving


for a down payment or working to pay off a mortgage, homeownership is one of
the largest financial targets to aim for.
Saving up a sizeable down payment is the best way to get a reasonable home
loan. And if you save enough, you can avoid the cost of Private Mortgage
Insurance, which will save you even more money.

5. Pay Off the Car

Having a monthly car payment is not a staple in life. A great example of a mid-
term goal is paying off a car loan. Somewhat sizable, paying off the balance
should only take a few years.

Once you’ve completed paying off your auto loan, don’t run straight back to the
dealership. It’s a signal that you should use those loan payments for other bills
or savings. You’ve already finished one debt – there’s no reason to hop into
another loan right away. It’s important to know the best time to sell or trade in
your car to make the most of your investment.

Instead, continue to drive your old car until you have a sizable down payment
for the next one. Make it your goal to pay for your next car in full, without
borrowing at all.

6. Invest in a College Education

Unfortunately, due to the increasing cost of college, paying off student loans has
become a modern long-term goal. Whether you’re a student paying off your
own balance or a parent saving for your child’s education, college tuition is
easily a substantial goal to base your budget on.

7. Plan for Fun

While most financial goals are oriented around being responsible, you should
always try to aim for one “fun” goal. This could be a vacation, a big-screen TV,
a boat or any other unnecessary thing that you simply want.

If you work hard and save diligently, you deserve to reward yourself with fun
savings goals. Plus, working towards something you truly want is a great way to
practice self-discipline and goal setting.

Need Help Defining Your Financial Goals?


No matter what your financial situation is, our expert coaches are ready to help
you reach your goals. Contact us today and start your path to financial freedom.

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