Financial Goals for Your Future

Setting short-term, mid-term, and long-term financial goals is a critical step toward financial security. You’re more likely to overspend if you’re not working toward a specific purpose. You’ll run out of money when you need it for unexpected bills, let alone when you want to retire. You may become trapped in a vicious cycle of credit card debt and feel as if you never have enough money to get properly insured, leaving you more vulnerable than necessary to deal with some of life’s significant risks.

Even the most prudent person cannot anticipate every crisis, as the world learned during the pandemic, and many families learn every month. Thinking ahead allows you to think through potential scenarios and do your best to prepare for them. It should be an ongoing process so that you can shape your life and goals to accommodate the inevitable changes.

Annual financial planning allows you to formally review your goals, update them, and assess your progress since the previous year. If you’ve never set goals before, now is the time to do so so that you can get—or stay—on solid financial footing. Here are some short-term and long-term goals that financial experts recommend setting to help you learn to live comfortably within your means, reduce financial stress, and save for retirement.

Short-Term Financial Goals

Setting short-term financial goals can provide you with the confidence boost and foundational knowledge you need to achieve longer-term goals. These initial steps are relatively simple to complete. Though you can’t make a million dollars appear in your retirement account right now, you can sit down and make a budget in a few hours. Many people can save up a decent emergency fund in a year. Here are some critical short-term financial goals that will help you immediately and put you on track to achieving longer-term goals. You can’t know where you’re going unless you know where you are now. This includes creating a budget,” says Lauren Zangardi Haynes, a fiduciary and fee-only financial planner with Spark Financial Advisors in Richmond and Williamsburg, Virginia. You may be surprised at how much money slips through the cracks each month.

Using a free budgeting program like Mint is an easy way to keep track of your spending. It will consolidate information from all of your accounts into a single location, allowing you to categorize each expense. You can also make a budget the old-fashioned way by going through your bank statements and bills from the previous few months and ordering each cost on paper or in a spreadsheet.

Create an Emergency Fund

An emergency fund is money set aside expressly for unanticipated expenses. Aiming for $500 to $1,000 is an excellent place to start. When you reach that goal, you should consider increasing it so that your emergency fund can cover more severe financial difficulties, such as unemployment. If you didn’t have an emergency fund before the COVID-19 pandemic, you probably wished you did now. If you had one, you might have depleted it and need to replenish it. According to Kevin Gallegos, vice president of sales and Phoenix operations with Freedom Financial Network, an online financial services company for consumer debt settlement, mortgage shopping, and personal loans, decluttering and organizing is another way to build emergency savings. You can supplement your income by selling unwanted items on eBay or Craigslist or holding a yard sale. Consider turning a hobby into part-time work from which you can save money.

Pay Off Credit Cards

Experts disagree on whether it is better to pay off credit card debt or save for an emergency. Some argue that even if you have credit card debt, you should set aside money for an emergency fund because any unexpected expense will push you further into debt. Others argue that you should pay off credit card debt first because the interest is so high that it makes any other financial goal much more challenging to achieve. Choose the philosophy that makes the most sense to you, or combine elements of both. Davis recommends listing all of your debts by interest rate, from lowest to highest, and paying only the minimum on all but your highest-rate debt as a strategy for paying off credit card debt. Use any extra money you have to make additional payments on your highest-interest card.

The debt avalanche is the method Davis describes. Another method to think about is the debt snowball. The snowball method requires you to pay off your most minor to most significant debts, regardless of interest rate. The idea is that the sense of accomplishment you get from paying off the smallest debt will motivate you to take on the next-smallest debt and so on until you’re debt-free.

Long-Term Financial Goals

Most people’s primary long-term financial goal is to save enough money to retire. The general rule of thumb is that you should save 10% to 15% of your paycheck in a tax-advantaged retirement account such as a 401(k) or 403(b) if you have access to one or a traditional IRA or Roth IRA. However, to ensure you’re saving enough, you should calculate how much you’ll need to retire.

Calculate your expected annual living expenses in retirement. The budget you created when you first started working on your short-term financial goals will give you an idea of how much money you’ll need. In retirement, you may need to budget for higher healthcare costs.

Subtract the amount of money you will receive. Include Social Security, pensions, and retirement plans. It will leave you with the amount that your investment portfolio must cover.

Calculate how much money you’ll need for retirement based on your desired retirement date. Calculate this based on what you currently have and how much you save each year. You can do the math with an online retirement calculator.

The Bottom Line

You’re unlikely to make perfect, linear progress toward any of your objectives, but the important thing is to be consistent. If you have an unexpected car repair or medical bill one month and cannot contribute to your emergency fund but must withdraw funds from it, don’t be too hard on yourself; that’s why the fund exists. Get back on track as soon as possible.

The same holds if you lose your job or become ill. You’ll need to devise a new strategy to get through that difficult time, and you might not be able to pay down debt or save for retirement.




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