When you think about it, financial success isn’t defined how much money you have, but whether you have enough money to achieve your financial goals. But what is a financial goal anyway? Is it having enough money to pay the rent each month, or is it something bigger, like buying your dream house or vacationing in the Caribbean?
The truth is that a financial goal can be as big or small as you want it to be. The only catch is that it should be something important to you. If you’re having trouble coming up with financial goals on your own, we’ve made a list of different types of goals and sorted them into three groups to give you some ideas of financial goals you might want to set for yourself.
Here are some Examples of Financial Goals
A short-term goal is one that you can reasonably expect to reach in one to three years. For these types of goals, you’ll probably want to rely on a traditional savings account to save your money. If your goal requires more than $2,000, though, you might want to park your money in a money market account or even in a short-term CD.
Short-term goals are also easy to make SMART (Specific, Measurable, Attainable, Realistic, Time-Bound). If you’ve never created a SMART goal before, try it with a short-term goal.
Short-term goal examples include:
- A down payment for a car
- New appliances
- An upcoming trip, like spring break
- A summer vacation
- Have over $2,000 in an emergency fund
- Pay off your debts
Set Your Financial Goals with this Helpful Packet!
A medium-term, or mid-term, financial goal will take 5 to 10 years to reach. For these types of goals, you’ll want to start seriously looking at high-yield savings accounts and investment accounts.
In addition to high-yield money market accounts and CDs, you might also want to do some research on how to invest your money in the stock market. There will be more risk involved, but your money also has more potential to grow.
Making medium-term goals SMART is slightly more complex than it is for short-term financial goals, since you’re trying to set up a savings plan that will span years. However, medium-term goals need the framework the SMART goal system provides even more than short-term goals do. You’ll want to have a concrete plan in place to help keep you on track as the years go by.
Medium-term goal examples include:
- Remodeling a room (kitchen, bathroom, bedroom, etc.)
- Pay off student loans
- Fund your own small business
- Have at least three months of salary in your emergency fund
- Buy a boat or an RV
If you’re looking at this list and wondering if these goals actually qualify as medium-term, congratulations! You’ve hit on an important truth about financial goals—how you categorize them depends on your financial situation. If you make $40,000 a year, for instance, you’ll need more time to achieve financial goals than someone with a salary of $100,000 will.
Long-Term Financial Goals
A long-term financial goal is any goal that will take over 10 years to reach. These are the goals for which investing money is pretty much a requirement. Open a high-yield money market account as soon you have enough money for an initial deposit, and from there look for accounts that give you best return on your investment.
You will absolutely need to make your long-term goals SMART if you want to reach them. Otherwise, you’ll end up losing focus over the years. In fact, you’ll also want to regularly review your goals to make sure you’re staying on track. This is also good advice for short-term and medium-term goals.
Examples of long-term financial goals include:
- Putting a down payment on a mortgage
- Funding your retirement
- Saving for your child’s college education
Got questions about setting financial goals? Ask us!
Reach Your Financial Goals with First Alliance Credit Union
When you’re thinking about what financial goals you want to set, you’ll also want to take into account whether each one is a short-term goal, a medium-term goal or a long-term goal. This will help you determine how you’ll save for your goals. Of course, you’ll also want to make each goal SMART to maximize the probability of success.
You can also get help reaching your financial goals when you become a member of First Alliance Credit Union. A traditional savings account will help you start saving for your goals, and once you have enough money saved up you can open a money market account or a CD. You can even open a WINcentive savings account to ensure that you save regularly and get the chance to win even more money that you can put towards your goal.