How To Set Financial Goals
What are goals?
A goal is defined as the object of a person’s ambition or effort — a desired result. A result one wants to achieve over an estimated period of time. This means that a goal is nothing when you don’t have a specific time you wish to accomplish it.
Financial goals simply put are the specific monetary amount you must obtain after a calculated period of time in order to realize your visions. It could come in the form of creating budgets, savings and investments. Financial goals should be aligned with your long-term plans, whether these plans include putting children through school, planning for marriage, retirement lifestyle or staying out of debts.
Types of Financial Goals
Short-term Goals; Short term goals are usually less than 3 years. They include getting your budget under control, adjusting your spending habits, avoiding credit card debt, planning for a vacation, changing your wardrobe, getting and maintaining a good credit score, saving a fixed percentage of your income and setting up an emergency fund.
Mid-term Goals; They are typically between 3–10years. This may include your endeavors like obtaining capital to start a business or anything that you wish to start soon but you do not have funds for it right away. This kind of goal can serve as a stepping stone to a bigger goal.
Long-term Goals: Goals above 10 years and a combination of your short-term and mid-term goals. This may include financial security in retirement, marriage or building your own apartment. It is only right to break large goals into short or immediate goals.
Characteristics of a valid financial goal
For your goals to be valid, they must have the following characteristics;
- Time Bound
Tips to get started
- Give your goals names that bring motivation and excitement
- Align your ideal life with your goal
- Make it time bound
- Automate your success
Automating as much of the actions involved in progressing toward your financial goals will help you achieve them better and reduce the stress that might come with it. With the myriad of fintech products and services available to choose from, automating your financial moves is highly recommended; from savings, to low and high risk investments.
It is also important to understand the basics of finance — financial literacy. Know how taxes work against your level of income, how to create a budget, different types of investments and the level of risks involved and the safest way to get started.
With PennyTree you can get started on achieving set financial goals by using our savings features — Target savings, Personal vault and Penn Rules.
Download the App now to get started with your financial goals.