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Setting And Understanding Financial Goals

You’ve always been a goal oriented person from the time you were just a kid in high school—making the varsity squad, that college scholarship, that job offer you wanted so badly. When you set out to do something, you went after it with no holding back. However, other than a general desire for security and a comfortable life, identifying your financial goals has been a bit tougher to sort out. And how can you achieve them, if you’re not exactly sure what they are?

To further complicate matters, the economic environment may suddenly turn, your personal situation may alter, or your goals themselves may change over time. The nature of financial goals can also be long term, intermediate or short term. But no matter how long it takes, they generally should work hand in hand and not in conflict with each other. Here are some common goals that might help you identify what you want to focus on:

Long-term goals
Good financial goals are often long term oriented.
Examples of long-term goals:

  • Owning your home
  • Saving for a financially secure retirement
  • Paying less income taxes consistently over time
  • Earning more on investments over time
  • Affording for college for your children
  • Having assets you can pass to your heirs

Intermediate and short-term goals
Short-term goals are exactly that, goals you can achieve without a long or delayed process of saving. Intermediate goals fall somewhere in between, but can also be midway points or markers toward reaching long-term goals. Here are some intermediate and short-term goals:

  • Renting a place of your own
  • Having a car
  • Being able to afford gifts for loved ones
  • Taking a travel vacation
  • Accumulating a nest egg for future purchases
  • Getting out of debt
  • Starting the process of saving for retirement and college tuitions

Intangibles
If you can achieve these goals, often you will be rewarded with intangible benefits that sometimes are just as important as the more concrete goals. In that regard, they can be goals to be sought after for themselves. They include:

  • Feeling you are in control of your finances
  • Having less stress
  • Having a sense of progress toward your long-term goals
  • Not worrying about money
  • Not spending too much time dealing with your finances
  • Securing financial peace of mind
  • Feeling able to assist loved ones with their financial situations

The benefits of patience and time

All of these goals are within your reach. But it will take effort and sacrifice—some more than others. The key is to start early, learn as you go, make fully informed decisions, and avoid major mistakes. In addition, a comprehensive financial plan—like a company’s business plan—will help you prioritize and balance all of your financial goals.

Learning to manage your finances intelligently can be more difficult than learning skills that may have just a few variables. With your finances, there are many variables that may not only change over time but often have a high level of unpredictability.

Think of how much your financial life has changed so far, with different jobs and income levels. There have also been those unexpected expenses and changes in your long-term fixed costs. In addition, your income from investments has changed, sometimes suddenly, as the market fluctuated, tax rules changed, and the economy cycled up and down. Some of these changes you could control and others you simply could not.

Like so many others, you will need to adjust the way you think about finances. As a goal oriented person, you tend to believe you are in control of all aspects of your life. In finance, as in life, that is simply not true. The good news is that all of the tools you need to achieve your financial goals are available. The information you need to improve your finances is there, along with supporting or enabling products and services. But again, the key is to start early, stay patient, remain focused on your goals, and persevere. When you do, time will be on your side and so will success.