Financial goals are personal objectives related to money management. These goals should be short-term, midterm, and long-term. Setting these financial goals move you closer to becoming financially secure. The absence of financial goals and objectives may make you more susceptible to financial disdain or ruin as there would be little to no financial discipline for your money management.
The pandemic revealed that even the most prudent financial individual can be prepared for once in a lifetime circumstances and events. However, having a financial plan in place allows an individual to implement certain mechanisms to mitigate certain aspects of a financial crisis. Financial planning and goal setting is an ongoing process as the financial attributes and obligations of individuals are likely to change over time.
Short-term financial goals should include the establishment of an emergency fund that is sufficient for an individual’s lifestyle and routine living expenses. The emergency fund set aside should be a minimum of three (3) and up to two (2) years, depending upon the financial dependencies of the individual or family. Eliminating revolving credit card debt should also be a short-term financial goal. Developing, managing, and monitoring a RAP (“Resource Allocation Plan”) is also critical to short-term financial goal setting.
Mid-term financial goals should include insurance planning and ensuring the financial risks of life are mitigated while living and upon the demise of an individual. Consideration should be given to disability, life, and long-term care insurance coverages. If student loans exist, the elimination of this debt should be planned. Dream planning for that home and luxury vacation is a part of mid-term financial goal setting. Finally, long-term financial goal setting involves the planning and preparation for retirement and funding living expenses during the seasoned years of life.
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Nicole Michelle
Finance and Money Wiz
January 24, 2024
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