Setting goals is one of the most important parts of your financial well-being. Without them, you may lose focus of your finances and find yourself in a bind. By identifying what you’re striving for, you clearly know where you’re going. Think about it: when you get in the car, you have a destination and route in mind, right? With your finances, you won’t know where you’re going until you identify and set financial goals.
Financial goals fall into two major categories: short- and long-term. Short-term goals are those you wish to accomplish within the next two years. Long-term goals are more than two years away. It is often easy to lose track of your long-term goals since they can sometimes be 10-, 20- or 30 years away. That’s why it’s important to identify and commit by writing them down.
How will you reach your goals?
Once you have determined your financial goals, you need to figure out how you’re going to reach them. A budget, financial calculator or financial professional are some of the tools available to help you as you lay out the steps.
You’ll also need to identify a time frame and the cost for achieving it. Does it fit into your budget? Use the following formula to determine your required monthly savings: goal / number of months = required monthly savings.
If the required monthly savings is more than your budget allows, you can reduce other expenses or save for a longer period. When calculating goals, such as retirement and college savings, you may want to consider using financial calculators and professionals.
Visit your local credit union or bank if you need help creating and sticking to financial goals. Lastly, set a time frame for revisiting your goals. Your needs may change over time and your goals will, too.
Article provided by Local Government Federal Credit Union.
The advice provided is for informational purposes only. For additional guidance contact your financial advisor.