Your Roadmap to Financial Freedom
Alright, let’s dive into something that might just change your life—setting money goals. Now, I know that sounds like a dry topic, but stick with me. We’re going to make it fun, informative, and—most importantly—actionable. Because you should always have money goals you’re actively trying to reach.
So if you want to skip ahead, grab my free guide with 6 money goals for financial freedom to get you start goal setting on the right foot, or keep reading and I’ll help you create your own!
By the end of this guide, you’ll be a money-goal-setting pro, ready to conquer your financial future. So, grab your favorite drink, get comfy, and let’s talk about how to get your money to work for you!
What Is A Financial Goal?
Before we get into the nitty-gritty, let’s answer the big question: what is a financial goal? In simple terms, a financial goal is any target or objective you set for your money. This could be saving up for a new gadget, paying off debt, planning your next trip, or setting yourself up for retirement. The key is that your goals are specific, measurable, and time-bound—because vague dreams won’t get you very far.
Now for me and my clients money goals should also be aligned with your life goals which takes some careful consideration and planning. We want our money to always be working for us, helping us move closer to the life we really want, so we’re less stressed when it comes to money and enjoying our life more.
Whether that’s spending money creating a nice meal for friends and family, taking a vacation, setting you up for retirement, retiring early, whatever it is that you want for your life in the near term and long term is how we want to structure our money goals – to work toward our life goals.
Put simply, we want to structure our money goals to work toward our life goals.
So keep that in mind as we talk about how to set money goals. Now, onto the fun part: figuring out what some financial goals might be for you. To make it easy, we break them down into short term financial goals, mid term goals, money goals for retirement and long term financial goals. Let’s get into each one.
What Is A Short Term Financial Goal?
Short term financial goals are like the sprinters of the financial world. They’re quick, usually achieved within a year or less, and they give you that immediate sense of accomplishment. A short term financial goal you have might be saving for a vacation, a minor home renovation, or even that fancy new gadget you’ve been eyeing.
But here’s the real kicker: how do short-term financial goals differ from long-term financial goals? The difference lies in the timeline and the impact. Short-term goals are quick wins that set the stage for bigger, more impactful long-term goals. So, before you start daydreaming about that villa in Tuscany, make sure you’ve got your short-term goals in check.
Short term savings goals are also crucial because they help you build good financial habits. To develop financial goals one should start with small, manageable targets. This might mean creating a monthly money plan or cutting back on unnecessary expenses. Small steps can lead to big changes, so don’t underestimate the power of a short term monetary goal.
Examples of short term financial goals might include things like saving for a holiday, paying off a small debt, or building an emergency fund. Think of these as the low-hanging fruit of your personal financial goals. But just because they’re short-term doesn’t mean they’re not important. They’re the building blocks for your bigger, more ambitious goals.
What Are Mid Term Money Goals?
Next up, we have the often overlooked mid term goals—the marathon runners of your financial journey. These goals usually take between one to five years to achieve and require a bit more planning and dedication. But trust me, they’re worth the effort.
So, what are some financial goals in the mid-term category? Medium term goals examples might include saving for a down payment on a house, funding your education, or even starting a side business. These goals are a bit more complex than short-term ones, but they’re also more rewarding. Think about anything that requires a moderate amount of time and money to achieve but is still within reach. Other mid term goals examples could be saving for a new car, paying off significant debt, or building a solid investment portfolio.
The best part about mid-term goals is that they give you a clear path toward achieving your long term financial goals. They act as stepping stones, helping you build the financial stability you need for those big, audacious dreams.
What Are Money Goals for Retirement?
Ah, goals for retirement—the ultimate endgame. Whether you dream of traveling the world, spending time with your family, or simply enjoying the peace of mind that comes with financial security, retirement goals are what we’re all working toward.
But what is a financial goal for retirement, and how do you set it? Goals in retirement are all about long-term planning. These are the goals that might take decades to achieve, but they’re also the ones that will have the most significant impact on your future.
Which is the best way to achieve long-term financial goals like retirement? Start by estimating how much money you’ll need to live comfortably in retirement. Then, break that big number down into smaller, more manageable targets. For example, a long term financial goal might include maxing out your retirement accounts each year or investing in low-risk assets that will grow over time.
Examples of long term financial goals for retirement might include building a retirement fund that allows you to live comfortably without working, paying off your mortgage before retirement, or even saving up for that dream home in a tropical paradise.
The key to successful retirement goals is to start early and stay consistent. The sooner you start saving, the more time your money has to grow. So, don’t wait—start planning your retirement goals today.
What Are Long Term Financial Goals?
Finally, let’s talk about the big kahunas—long term financial goals. These are the goals that take years, even decades, to achieve. They’re your ultimate money dreams, the ones that will have the most significant impact on your life.
Long-term financial goals examples for students might include paying off student loans, buying a home, or building a retirement fund. For those further along in their careers, long-term financial goals examples might include achieving financial independence, creating a substantial investment portfolio, or leaving a legacy for your family.
As we did in the short term section, let’s also cover what is short term financial goals compared to long-term ones? While short-term goals focus on immediate needs, long-term goals require patience, discipline, and a strategic approach. Which of the following is a long term financial goal? Think buying a home, saving for your child’s education, or retiring comfortably.
To achieve your long-term goals, you’ll need a solid plan. This means setting specific, measurable, and time-bound targets. For example, a long term financial goal might include saving a targeted amount each year for your child’s education, investing in a diversified portfolio, or maxing out your retirement accounts.
But here’s the thing: to develop financial goals one should always start with the end in mind. What do you want your financial future to look like? Once you have a clear vision, you can start working backward to set the short-term and mid-term goals that will help you get there.
What Is A Needs and Wants List?
Let’s talk about the needs and wants list—one of the easiest tools to use in your financial toolbox. This list helps you distinguish between what you absolutely need and what you simply want. Trust me, mastering this list can make or break your financial goals.
Start by listing out your essential needs—things like rent, utilities, groceries, and healthcare. These are the non-negotiables, the expenses that you must cover no matter what. Once you’ve covered your needs, you can start thinking about your wants—those extra things that make life a little more enjoyable, like dining out, entertainment, or that daily latte.
Creating a needs and wants list is crucial for setting your budget goals or as we say around here, your money plan. It helps you allocate your money more effectively, ensuring that your essential needs are covered before you start spending on wants. And just because something falls on the needs side of the list doesn’t mean you couldn’t pay less for it. Doing this exercise can help you identify areas where you can cut back and open up more money to go toward your money goals.
That’s why it’s safe to say this list also plays a significant role in actually achieving your finance goals. By creating a needs and wants list, you can take an honest look at how you’re using your money to reach your goals and avoid falling into more debt or overspending. This, in turn, frees up more money to put toward your long term saving goals and other financial objectives.
How Do I Prioritize Money Goals?
Everything can’t be important at the same time. We have to prioritize our money goals. That’s why we just went through creating a needs and wants list. It’s an incredibly helpful tool to prioritize your financial goals.
To do that, we first consider how aligned the money goal is to our life goals. We don’t want to prioritize a money goal that’s out of alignment with what we want for ourselves because it makes working toward that goal painful and we have to keep motivating ourselves to work toward it. This usually happens when we set a money goal as something we think we should do rather than as something we actually want for ourselves and our life.
Next, we look at the timing – short term, mid term, long term. It’s true that timing is everything. Because you have more time to reach your long term goals, you may choose to focus on your short and mid term goals first depending on what they are and how important they are to you.
Finally we look at what we’re capable of doing moneywise. This is where your money plan comes in so if you don’t have one jump over to this article on creating a money plan and come back when you do. Then you can see how much you can put toward reaching your goals after you pay all your needs (bills and necessary expenses).
Final Thoughts On Creating Money Goals
Setting money goals is the first step toward financial freedom. Whether you’re working on short term financial goals, mid term goals, goals for retirement, or long term financial goals, the key is to stay focused, be consistent, and reevaluate as needed.
Our money goals should be aligned to our life goals so that as we reach our money goals we have more of what we want in life. So as our life goals and priorities change, it’s okay for our money goals to change. They should change. Your money goals should be structured to reach your life goals.
Remember, every small step you take today brings you closer to your ultimate financial dreams. So, what are you waiting for? Start setting those goals, track your progress, and watch as your financial future begins to take shape. With the right mindset and a solid plan, you can achieve anything you set your mind to.