The money you earn, specifically every single dollar, needs to have a job. Sometimes the job is to simply pay a bill. The job can also be saving toward a goal. Goals can be both long and short-term. A long-term goal could be saving for a house, a business, or a future college education. A short-term goal could be a new car within the year, new furniture, or even a toy. Whatever your goals are, it is important to have goals. Without goals, we tend to spend our money haphazardly and with little to show for it.

Setting financial goals starts with understanding your core values and what is important to you. If you have not determined your core values yet, check out our post on that subject. Your core values set the framework for all of the decisions you make in your life whether you know it or not. They also can be the cause for disappointment along the way when they have not been honored.

Example: If you determine that safety is a core value, perhaps you would like to own a home for your family in a safe neighborhood. Saving for such a home would then become a financial goal. If you began saving $200 a month towards a down payment you would see the amount of saved money grow each month and bring you closer to your goal. However, if you decide for a few months out of the year to instead spend your $200 on a new television or laptop computer, your distance to the goal becomes longer.

Long-term Financial Goals:

• College Education

• A house or other real estate

• Vacation

• Home improvements

• Retirement

• Starting a business

Mid-Term Financial Goals:

• Automobile

• Student loans

• Life insurance

Short-Term Financial Goals:

• Establish a budget

• Paying off debt

• Creating an emergency fund

Order of Operations

In Module 2 we will discuss Snowball method of paying down debt. However, we can work this method in similar fashion as we put the majority of our energy into our short-term goals and then move that energy into long term and so on. However, if you are already participating in a retirement plan, you do not need to stop contributing as those contributions are likely pre-tax and are therefore reducing your total taxable income now. Let that contribution ride and divert discretionary spending into your short-term goals.

Eye on the Prize

When you are saving towards a goal it is so important to remember to keep your eye on the prize. Imagine what life will be like and the opportunities you will have when you reach your goal. Trade some liquidity away now for security later.