Setting financial goals is a big part of reaching financial freedom. Experts say you are more likely to achieve goals if you put them in writing and monitor them regularly.
With the new year upon us, it is time to look at your short term financial goals (what you want to achieve in your next 12 months). Short term financial goals might include savings targets or a debt payoff target for the next year.
Setting financial goals is a process I enjoy. It allows me to plan for a future I can get excited about.
You should set some short term financial goals (one year or less), some goals that have a medium time range (between 1 and 3 years and length) and long term goals (five years or more).
The Importance of Setting Financial Goals
Why are financial goals important? They are a guide to get what you want out of life. My big long term goal is to make a transition from the corporate world in some form in five years.
I am not sure if that means leaving it completely or transitioning to full time work-at-home. I have a list of goals that fall under short and medium that will get me to this long-term goal of leaving the corporate life.
Long term goals often change depending on life events, but if you plan on buying a house or paying for a college education, it is a good idea to get these on your long term goals list and start thinking about how you are going to fund them.
Personally, a lot of my medium financial goals are stepping stones that are helping me achieve my long-term goals. And really the short-term goals aren’t a whole lot different than the medium goals.
They are earlier steps to the big plan. But this is just me. Your method of planning may differ greatly.
The important thing is just to give it some thought. If you are at a complete loss as to what your financial goals are, identify the 3 things in your life that mean the most to you and that should jump start you down the path to identifying financial targets.
If you have never done goal setting before, why not make 2019 the year you start this practice. Personal finance is not the only area where goals are often set.
Consider setting health, spiritual, relationship and personal development targets as well. Challenge yourself to a life of continuous improvement and growth by creating targets.
Short Term Financial Goals Might Include…
So, I have a planner where I have recorded the following goals for the next 12 months.
- Pay off the last $9,200 of my student loan debt- this is something I can do just by going to work every day and being mindful of how I spend money. It will require making a bigger payment rather than paying just the minimum. The interest rate is less than 2% which has made it easy for me to continue carrying the loan for many years.
- Make $20,000 with a side hustle – this target will be a stretch goal for me. It will take revenue of $1700 a month for each month of the year to reach this goal. Realistically, it will be 2 – 3 months before I see any income, so I am targeting $2,000 a month average for a 10 month period.
- Practice intermittent fasting (eating only between 10am – 6pm) two days a week. Hopefully, this will lead to an additional 15-pound weight loss this year. I lost 30 pounds last year and have seen a huge benefit. Although the weight loss is great, it is the increase in energy and greater mobility that has been the biggest benefit.
- Thirty minutes of strength training two days a week and 15 miles of walking each week.
- Read one book each month (stretch target of 2 per month).
Setting the goals is the easy part. It is sticking with it for a year through thick and thin that can be the challenge. Take some time and think about what you really want and what it will take for you to achieve it.
Even if you only pick one target for your financial life, it is still something to strive for throughout the upcoming months.
Do you want to really push yourself to financial freedom? Set a stretch goal. A stretch goal is a something that it is going to be a “stretch” to achieve. If you are a competitive person, you will have fun with this one.
Attain Your Goals by Seeing Them Every Day
Studies show that people that write down goals and review them periodically are more likely have a higher level of achievement. The written goals provide a road map to success.
The corporate workplace has long been known for setting annual targets and pay increases often depend on how well these targets are achieved. Write your goals down and put them where you can see them often.
The best way to set goals is with the SMART goal method. In case you have forgotten what a SMART goal is, it is a goal that is specific, measurable, attainable, relevant and time-based. It is that simple.
Get out your favorite medium for taking notes (paper, electronic file, cocktail napkin) and set some targets for the new year and get to work. Set some targets to be achieved over the next 12 months.
Evaluate and adjust these goals monthly as needed. Make this year your best year by achieving short-term financial goals that will take you another step closer to financial freedom.