Financial Goals are something we work to achieve in order to fulfil our desires and needs. Working for an objective especially financial objectives gives you the courage to do exceptional things. Setting financial goals can help take control over day to day expenses and become more confident over your decisions.Â
In this article, we are going to learn more about Financial goals. For example, you are 21 and want to buy a new bike for yourself. Now you manage to save 1500 daily to buy a bike at the earliest. Now, the decisions you take to save 1500 from your savings are financial goals.
What are Financial Goals?
Financial goals are the objectives or goals that you set to manage your money for your future. It consists of earning, saving, investing and spending based on your goals.Â
Setting up financial goals help you to achieve your objectives in a shorter time. Many save for buying a house, paying off debt, starting a business, emergency funds, or getting financially independent. When setting up a financial goal you might need to ask three important questions.
- What is the objective?
- How much money is required?
- How much time is required?
Based on your goals it will be categorised into short term or long term financial goal.Â
Also, check, What is Financial Management Objectives and its importance?
Financial Goals Key TakeawaysÂ
- Financial goals are the targets or goals you plan to achieve your objectives in a specific time.Â
- Financial goals take into account income, spending, savings, and investing
- Each financial goal consists of a purpose, amount of funds required, plan layout and the anticipated time frame to achieve the goal.Â
- Financial goals allow you to effectively utilise your resources and achieve bigger goals.
Financial Goals Examples
Financial goals might include a number of goals to save funds or a single large investment. Some of the financial goals examples are mentioned below.
- Paying off debt
- Building emergency fund
- Starting a business
- Financial independentÂ
- Buying a home
- Buying a car
- Improve Credit Score
- Saving for a trip
- Saving for a cure
- Retirement planning
Your financial goals depend on several factors such as whether you are saving as a single person or working with others, income, expenses, debts, etc. It is important to make a realistic goal after analysing and taking all factors into consideration.
Buying a house
Most of us aspire to build a dream house which might require consistent planning and implementation. For example, at the age of 35 you want to buy a 4 BHK apartment or home. Now you need to plan accordingly, set up a saving amount, and start saving.Â
Retirement Planning Goals
This is one of the most desired objectives of setting up a long term financial goal. Retirement planning goals set you financially independent or saves a decent amount of money to support you in your elder age.Â
Making early savings might help you tackle any unforeseen event and safeguard your assets.Â
Also, check, What is Enterprise Asset Management Software?
Emergency FundsÂ
It is often said to save something from your earnings for unforeseen events. Sometimes there might be events like illness, accidents, damage or requirements of emergency funds. Not having proper funds might send you on the back foot. You might make savings for emergencies by making fixed deposits, bonds, real estates, etc.Â
Financially IndependentÂ
When you make smart investments or set up a long term financial goal you might achieve financial independence after you turn 40 or more. If you are working professional you might start investing at an early age to make a good amount of money by your 40s to sustain a decent life.Â
It is important to analyse the risk involved and diversify your investment to mitigate losses.
Saving for Trip
This is an example of a short term financial goal where you save a certain amount every month or weekly to finance the trip you were planning for a certain amount of time. It is important to take a break and relax your mind over a short trip.
Why are Financial Goals Important?
Financial goals consist of small steps that you take today and the day after for a certain period of time to save money for your future needs.Â
For example, you want to buy a home for yourself but you cannot purchase a home at the instant as you will need a huge amount of money. Well you can create a plan for 10 years which consists of saving a part of your salary for your home so that you can buy a home in ten years.Â
This is what makes financial goals important. Make your plans calculate how long it will take you to reach your goal and how much you need to save on a daily basis or monthly to reach your objectives.Â
Types of Financial Goals
There are a wide range of requirements which might motivate you to start financial planning or setting a goal for the future. Based on the magnitude and time required your financial goals might be classified into three important types.
Short Term Financial Goals
Short term goals are things you might want to achieve quickly or in a shorter span of time like in the next few months. The investment might be big or small and the savings will differ accordingly. It is generally of a year or less time frame and requires less planning but proper monitoring.Â
For example, paying small debts, saving for a trip, buying for an emergency fund, saving for down payment, etc.
Medium Term Financial Goals
These types of financial goals take more than a year to achieve goals which fall in between the range of short term and long term financial goals. A number of short term financial goals might give rise to medium term financial goals.Â
The way you manage your medium term financial goals sets your way for the long term financial goal. For example, improving credit score, clearing outstanding dues on credit cards, paying medium loans, etc.
Long Term Financial Goals Â
Long term financial goals are objectives which might help you in getting financially independent or buy your home which you always planned for, retirement planning, funding your child education, paying off a large debt, etc.Â
Long term financial goals take time and patience but are fulfilling at the end. It is generally of a span of 5 or more years as it involves a larger sum of money saving with consistent planning and implementation.Â
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Financial Goals FAQs
Q1. What are financial goals?
Ans: Financial goals are the objectives or goals that you set to manage your money for your future. It consists of earning, saving, investing and spending based on your goals.
Q2. What are types of financial goals?
Ans: There are three major types of financial goals mentioned here.
Short term financial goals
Medium term financial goals
Long term financial goals
Q3. Why is financial goal important?
Ans: Financial goals are important for many reasons as they help you achieve your dreams of buying a house, saving for emergency funds, retirement planning, funding your child education, etc.
Q4. What are financial goals examples?
Ans: Retirement planning goals, buying a house, emergency funds, sponsoring a trip, starting a business, paying debts, etc are some of the examples of financial goals.
