Setting Financial Goals

With a full picture of your financial situation, you are ready to think about where you want to go from here. Again, we can frame this in the context of short, medium and long-term.

Setting Short-term financial goals

Short-term goals may be along the lines of the following:

• Setting a budget, or reviewing an existing one — do you make enough money to cover your expenses and save money on top of that each month?
• Build up an emergency fund in your savings account
• Paying down or refinancing high interest debt, such as credit card debt

Setting Medium Term Financial Goals

Once you have set a budget, which enables you to pay down debt and maintain your emergency fund at a level you feel comfortable with, then you’re ready to look at Medium-term goals. These could look something like:

• Paying down any outstanding lower-interest debt
• Putting savings to work in medium-term products, such as Certificates of Deposit (“CDs”), or a Brokerage Account for investing
• Setting aside money for other life goals, such as buying a house, a car, or perhaps creating a business.

Setting Long-Term Financial Goals

Finally, we look to long-term goals. This ties back into your budget, set back in the short-term goals step, and perhaps some of your additional saving in medium-term goals.

• Buy a house/car, take the trip of a lifetime or set up your own Company
• Retire at age ___ able to live for __ years on $__ per month.

This can be a lot to figure out, so we recommend using this handy tool put together by NerdWallet to see where you stand. It will guide you through your current expectation for retiring, and allow you to adjust all of the parameters, to see where you stand based on changing assumptions over time.

That’s it for Ostrich’s goal setting guide!

Now check out Investing Part 1: Retirement Accounts and Investing Part 2: Short-Term. As well as our other 101 guides such as, giving, and saving & budgeting 101.

Originally published at https://getostrich.com on September 5, 2020.