Finance Globe

U.S. financial and economic topics from several finance writers.
3 minutes reading time (666 words)

Defining Your Long-Term Financial Goals

We can get so bogged down by the demands of our daily lives that we forget about the future, about planning for it and taking steps to make sure we’re securing the future we desire. Sometimes daily life can be so demanding that we forget to even think about the future, much less plan and actively work for it. It can be hard to focus on what we want for our lives decades from now, especially when just paying the bills is hard. Still, it must be done. And the sooner we start, the more time we have to create the life we want to live.

Goals are important for every facet of life. Setting a goal is as simple as defining the goal, choosing a deadline, and planning the steps to get there. Once you’ve set a goal, consider it objectively to make sure it’s realistic and reachable.

Your financial goals will shape and influence your entire life: how and where you live, what you eat, what you wear, what you drive, to name a few things. Because finances are so integral to our lives, it’s critical to give a lot of thought to what we want to accomplish financially.

Fast forward through time, imagining your life at different ages – 50, 60, 70 – what would you like to be doing at those times? Consider what your finances need to look like for you to live the life you want to live. How can you make it happen?

Many people dream of being rich. Sure, that would probably solve all your financial problems and let you accomplish all you want, but the likelihood of that happening is low and gets lower depending on your where you start. So if your goal is to “get rich,” consider another goal, something more reachable.

Examples of Long-Term Financial Goals

What do you want your net worth to be and by when? Your net worth defines your economic position. It’s calculated by subtracting your debts/liabilities from your assets (not your income, but the money you have in the bank, invested, in equity, etc.).

How much money do you want to have in the bank and by when? Complete this sentence. By the time I retire at ______ (age), I want to have $_________________ saved up. Can you do it? It depends on how much you’re contributing now, the amount of time you have to keep making contributions, and the interest rate on your retirement accounts.

Do you want to own your home or are you fine with making payments on it? If you want to fully own your home, meaning your mortgage is completely paid off, you’ll probably have to send the lender more than your regular monthly payment. Or, you can invest the extra monthly payments, get a return on the money, and pay your mortgage in a lump sum once you’ve saved up enough money.

Do you have debt? What do you want to do about it? The easy answer is that you want to pay off your debt, but by when? Do you know how much debt you need to pay off?

Meeting Your Goals

As you come up with your goals, write them down to make them more real. You can always alter your goals if you need to, for example, if you set your sights on more aggressive goals. Put a time limit on your goals. Some you may want to accomplish sooner than others. For example, you may want to pay off your debt the quickest. Then, with a time factor for all your goals, you can order them based on how soon they should be accomplished. It becomes somewhat of a roadmap that you can use to guide all your financial decisions.

Setting goals is a challenge for sure, especially if you start thinking about how hard it will be to make them happen, but don’t let negative thoughts hinder you from at least dreaming about what you want to do.
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Monday, 02 August 2021

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