The Importance of Setting Financial Goals

1. The Importance of Setting Financial Goals Setting financial goals is vital in ensuring that one can go through life’s challenges with something in store for the uncertainties that lie in ahead. Going through life without a clear financial plan for the future is like being on a ship that’s adrift. Going nowhere. Whether you’re flipping burgers, a rising star, or an established entrepreneur, a set of financial goals will give you priorities to focus on. So what if you’re commuting to work on a bike when the end goal some years down the road is putting down some money on a house? When setting out to do financial goal-setting, setting short-, medium-, and long- term goals is important. Short means something that you can attain in a year, medium in 5 years or less. The long-term goal should include financial stability in your retirement age. Long-term goals may take a decade or two to achieve, but would leave you with a good mix of assets and a comfortable lifestyle. Both your short-term and medium-term goals should contribute toward your long-term goal.

2. Short-term goals should include provisioning for an emergency funds. It’s been advised that one should have at least 3 months of living expenses to cover life- changing events and help stabilize you financially. This can be the loss of a job, a sudden need to travel for a family emergency, or a medical crisis. One should also be socking away some money for the income tax payments that are an unavoidable fact of life. Medium-term goals may be for a renovation, some travel you may have planned, or some personal project (business or otherwise) that you have been eyeing. A long-term financial goal may be paying off your mortgage, setting up your retirement fund, or buying a vacation home somewhere. Maybe even a fund to help your kid through college. But be realistic. Setting up these funds requires discipline and a frugal lifestyle. These short, medium, and long-term goals required setting aside money, and you may have to adjust your spending in order to be able to meet these goals. For the

3. first couple of months of working towards your goals, keep track of your expenses. Only by knowing what essential you need to spend on will you be able to make a realistic financial plan. It’s not a bad idea to consult a financial planner. When it comes to planning your financial future, the sound advice of an expert may be the best expense you incur. Content Source