The conversation surrounding financial goals typically focuses on the short and long term. Which makes sense, of course. Naturally, people like the instant gratification of accomplishing a short-term goal. Whether it’s purchasing a new phone, or implementing a savings strategy, these short but effective goals can increase someone’s confidence and lead to further financial improvement.
On the other hand, long-term goals provide people with a sense of direction and purpose in their daily lives, especially when it comes to finances. A well-thought-out long-term goal can make someone subconsciously behave (or spend) in a way that benefits their end goal and their wallets. Saving for a quick weekend getaway or retirement later down the road are great financial goals – the latter a necessity for most.
While short-term goals cover things you would like to achieve in one year or less, long-term goals typically consider things five or more down the road. Medium-term goals sit right in the middle at one to five years and require strategies to be successful just like their short and long-term counterparts. With proper planning and diligent saving, medium-term goals can be achievable and used as a stepping stone for longer-term success. In this article, we will explore the essence of medium-term financial goals, offering direction on how to achieve them one step at a time.
Examples of medium-term financial goals
Saving for college, buying a car, paying off debt, or planning a vacation are just a few medium-term goals people may have. With the right savings strategy, these goals can be extravagant too, like starting a small business or saving for a down payment on your dream home. Examples like saving for college can be building blocks for accomplishing a long-term goal like working in a specific field such as medicine or law. Regardless of which medium-term goal you choose to embark on, when you really think about it, they tend to serve as a healthy reminder of how hard work and careful saving can be rewarding.
Brainstorming goals that you would like to achieve in the next five years is only step one of the process. To follow through and accomplish your goals you must have a plan with specific steps that is as unique as you and your financial future.
Steps for success
Assess your current financial situation
Before you can begin working towards your goal, it’s crucial that you set aside time to review your financial status. This includes but is not limited to, your income, expenses, cash flows, and any future events that may positively or negatively impact your financial health.
Define your medium-term goals
Now that you are cognizant of your financial capabilities, you can begin brainstorming what you would like to accomplish over the next five years. Once you have made your list of goals, do not be afraid to cross some off or add additional ideas once you have assessed the financial demand of the goals. Address each goal and ask yourself:
Is this goal specific?
Is this goal measurable?
Is this goal achievable?
Is this goal relevant?
Is this goal time-bound?
If your answer is ‘yes’ to all these questions, you have found yourself a feasible goal to begin working towards.
Create a budget
This step can be harder for some than others but may be the most important. To create a budget, identify your income and track your discretionary expenses. Unfortunately, there are some obligations in life that no one can avoid, such as your mortgage, taxes, or living expenses. However, discretionary expenses, such as buying clothes or going out to eat at a restaurant, can be cut back to assist in funding your goals.
Invest wisely
Smart investing can provide both protection and a return. Make sure to invest in assets that align with your time horizon, risk tolerance, and required return. Review your accounts regularly to ensure the investments remain in alignment with your financial goals.
Stay flexible
Unfortunately, life and your finances are never truly predictable. As Forrest Gump once said, “Life is like a box of chocolates, you never know what you’re are gonna get.” It is essential to adapt and remain calm should an unforeseen event knock you off track. Things happen, and with the proper management and focus your goals can can keep moving in the right direction regardless of what life may throw your way.
Reward yourself
While working towards your medium-term goal, don’t forget to pat yourself on the back every once in a while. Achieving goals can be demanding, and you should acknowledge the small victories along the way to provide for further motivation.
Setting your goals and effectively implementing a plan for success requires perseverance and dedication. By following the steps for success, you can navigate towards victory, turning your dreams into reality. Grab a pen and paper, take a deep breath, and start planning your medium-term financial goals today.