How to Set Realistic Financial Goals

How to Set Realistic Financial Goals

It’s motivating to dream about being wealthy, which is why we save every penny that we can. This is one reason why we set financial goals. But the world that we live in costs us money – food, shelter, communication, transportation, convenience – that it feels nearly impossible to make our dreams come true. This is especially for people who aren’t earning much in the first place.

To save as much as we can, we set financial goals, but even those are difficult to follow. With bills surging in every month, we always end up depleting our hard-earned money and go back to the vicious cycle of working, earning, and then spending everything.

So, how can we break this cycle and finally reach financial freedom and stability?

Short-term, Mid-term, & Long-term Goals

The key to making our goals realistic is to be specific with what we want to achieve. Classify your financial plans into three categories: short-term, mid-term, and long-term.

Short term financial goals are those you can complete within hours to a year, such as:

• establishing a daily or monthly budget plan
• saving for an emergency fund
• and paying off your loans every month.

Mid-term financial goals are the ones you can work one after completing your short-term goals. This will serve as your bridge toward your long-term plans, so your financial decisions will be critical in this one. This is where you start building your wealth, so investments should be part of your considerations. Getting life insurance and investment plans should be among your mid-term goals, especially if you’re married with kids because life insurance gives your family protection should you pass away suddenly.

Insurance policies are also beneficial if you become unable to work, for example, due to incapacity or severe illness. Investment plans, one the other hand, are the steps you take one making your dreams come true, like buying your first home and saving for your kids’ college education.

Finally, long-term goals are the ones that should benefit you when you retire. This involves:

• making a retirement plan
• racking up your retirement savings
• and finding more ways to increase those savings.

Financial Goals To Set Yearly

Setting new goals every year gives us the chance to review our current financial status and see what we’ve achieved so far. Your situation may have also changed as another year entered, so you might need to change or update your plans, too. Here are examples of realistic financial goals to set every year.

With this guide, you can already secure your financial freedom and hardly worry about getting short again. Be sure to observe self-discipline to make all your dreams a reality.

Images courtesy of Pixabay, UnSplash and Pexels.

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