It’s taken time, but you’ve finally done it. You’ve created a monthly budget that you’re sticking to, and you’re regularly adding money to your savings account. You’ve done everything you need to do to be financially successful, right?

Not quite. While creating a monthly budget and regularly saving money are two of the most important steps on the path to financial success, there’s one more step you must take. You have to start setting financial goals and reaching them.

What are financial goals?

Here’s What a Financial Goal Is

A financial goal might seem like a formidable concept, but it’s actually pretty simple. Financial goals are specific objectives, the same as any other goals. The difference between a financial goal and other goals is that you’ll typically achieve these goals by saving money and spending it when you have enough to reach your goal. Some examples of financial goals are:

• Saving for a vacation
• Buying a home
• Building up an emergency fund
• Saving for retirement
• Saving for college
• Buying a car
• Paying for a wedding

You should know that people might not refer to financial goals as such. They might call these types of goals savings goals or money goals. They usually mean the same thing, though.

Get started setting financial goals today!

Types of Financial Goals

The most common financial goals will be one of three types:

• Short term financial goals are goals that will take at most five years to achieve. Examples of these types of goals might include creating an emergency fund or saving for a vacation.
• Mid term financial goals will take between five and 10 years to reach. These could include funding a wedding or making a down payment on a house.
• Long term financial goals are any goals that will take at least 10 years to achieve. Saving for your child’s college, paying off your mortgage and funding your retirement are all examples of long term goals.

While all these types of goals will require you to save money in order to reach them, you’ll want to use different savings strategies to maximize your money depending on the type of goal you’ve set. For short term goals, you’ll probably keep your money in a traditional savings account or short term CD until you’ve reached your goal. Mid term and long term goals, though, allow you to invest your money in accounts like money market accounts, IRAs and even the stock market to take advantage of higher interest rates and returns on investment.

Why set Financial Goals?

If you’ve never set a financial goal before, you might be wondering why you need one, especially if you already have a budget and savings. It’s a good question to ask—why is it important to set financial goals if you already have a strong financial foundation?

As it turns out, financial goals give you benefits that you won’t get from making a budget or regularly saving money alone. For instance, financial goals give you a clear sense of purpose and direction. This helps you prioritize your expenses and develop financial habits that will help you achieve your goals and keep you from getting distracted by less meaningful expenses.

Financial goals also motivate you. When you set goals that mean a lot to you, you’ll be willing to keep working towards them for months on end, if not years. If you have a financial goal to buy a beach house, for instance, the image of you relaxing on the deck of your beach house, drink in hand, can keep you saving money toward that goal even when you’re tempted to give up.

Finally, setting financial goals makes you think about what you want out of life. When you set financial goals, you’re thinking about what matters to you most and making an agreement with yourself to focus on those things that are important to you. This doesn’t mean you can never change your mind about your goals, but it does give you an initial roadmap of where you want to go.

Got questions about saving for financial goals? Ask us!

Start Setting Financial Goals With First Alliance Credit Union

Setting financial goals is an essential part of financial success. Financial goals are just like other goals, except that you usually reach them by saving money. There are three types of financial goals—short, medium and long term goals, and you’ll need to use different savings strategies to hit each type.

If you need help setting and reaching financial goals, become a member of First Alliance Credit Union today. We can help you set financial goals using our free, downloadable financial goal planner that will not only help you set your goals, but also give you a roadmap to reaching them. You can even use our accounts to help you save for your goals, including traditional savings accounts, money market accounts and certificates of deposit (CDs).