Knowing your short- and long-term goals is the first step to building wealth. By creating and maintaining a plan to achieve them, you can ensure you remain on track over time.
How to Set Your Financial Goals
The first step in goal setting is to identify the reasons behind your desire to save money and build wealth. Knowing what you are working toward will make it easier for you to create a savings plan that fits your budget and needs.
One way you can categorize your goals is by separating them into time-based buckets:
- Short-term goals (3-6 months): These are funds set aside for emergencies or other miscellaneous spending needs.
- Medium-term goals (5-10 years): These are funds set aside for larger purchases, such as a home loan or a child’s college.
- Long-term goals (15 or more years): These are funds set aside for spending needs during retirement.
Saving for the long-term requires consistency and commitment. To put yourself in the best position to achieve your savings goals, you should consider creating a savings plan. This can help you set aside money consistently — often automatically — and build a habit of saving. However, even though it’s important to save, you should ensure you still have the funds to cover your expected costs, such as rent, transportation and food.
In addition to setting aside funds, also consider limiting or eliminating unnecessary purchases and sources of debt. To reach your financial goals, you’ll want to prioritize saving over unnecessary spending.
How to Preserve Your Financial Goals
Once you have a savings plan, it’s time to work toward your goals. Saving money over an extended period may be discouraging for many people, given how long it can take to see results, but it’s important to understand the importance of taking small, consistent steps on your savings journey.
Though you may be prepared to save, there are still several external factors that can affect your plan. The best approach to these challenges is to adopt a proactive mindset and stay positive. It’s impossible to be prepared for every situation, but we recommend following these tips to best preserve your savings goals:
- Monitor your accounts: Make sure you’re aware of all activity occurring in your bank accounts.
- Plan for inflation: If your savings don’t grow at the same rate as inflation, you may lose out on long-term purchasing power because the cost of goods and services will increase.
- Protect yourself from scams: Guard your information carefully and beware of any suspicious communications.
- Find support: If saving is a challenge, consider speaking with a financial expert to identify products, services and advice that can push you in the right direction.
- Have a purpose: Remind yourself why you started saving in the first place, and why it’s important for you achieve your financial goal.
- Be healthy and fit: Taking care of your physical and mental health will help you save money on medical visits, prescriptions and other treatments over time.
- Budget, watch and talk spending: Engaging in money-conscious behaviors and activities will encourage you to more actively manage your finances and reach your goals.