A Personal Guide To Financial Goals For Your Life

Posted on 1 Nov 2022

What is a financial goal?

A financial goal is an objective or aim you have that’s related to managing your money. Your plan can involve earning, saving, spending, or investing money.

Having clear financial goals can help you quickly manage and maintain your budget. This is because working towards that vision is easier when you have a clear picture of what you want to achieve.

Financial goals can also help you prepare for the future and protect yourself against financial crises. As the pandemic taught us, families and businesses must save money to be ready for such challenging circumstances.

There are also different goals: short-term, midterm, and long-term. By setting other goals, you’ll be able to achieve various financial goals like paying off short-term bills, managing your retirement fund, and getting rid of credit card debts.

Setting financial goals also means reviewing your objectives, updating them, and viewing your progress from the previous month or year.

This post will cover everything you need to know about financial goals.

3 Types of Financial Goals

Here are 3 types of financial goals you can set:

Short-term Financial Goals

Setting short-term financial goals is vital for long-term success. Prioritize creating a budget to enhance financial literacy, establish an emergency fund for stability, and promptly pay off credit card debts to improve your credit score and overall financial health.

Mid-term Financial Goals

Once short-term goals are met, focus on mid-term goals. Secure life insurance for family protection, pay off student loans to enhance financial independence, and pursue personal dreams like buying a vacation home with the guidance of a certified financial planner.

Examples of midterm goals include:

Getting life insurance: If you have a family that depends on your income, getting life insurance can provide them with the financial security they need if you pass away prematurely.
Paying off student loans: Student loans can be a significant setback and prevent you from achieving your financial goals. As a result, it’s a good idea to pay them off as soon as possible. This way, you can free up cash and increase your monthly budget for other essential things.
Personal financial goals: Midterm financial goals can include your dreams, like buying a vacation home, renovating your current home, or even moving into a bigger house.

Long-term Financial Goals

Long-term financial goals mark the pinnacle of planning. Save for retirement through the Canadian Pension Plan (CPP) or another retirement plan. Clear mortgages, fund children’s education, and initiate entrepreneurial ventures for lasting financial independence with advice from a certified financial advisor.

Examples of Financial Goals

Here are examples of financial goals you can set:

Emergency fund

Starting an emergency fund can help you prepare for the unpredictable things that may happen in your life. Having an emergency fund is crucial if you want to survive challenging life events.

Here are some examples of emergencies you might face in the future:

Medical expenses
Unemployment
Car accident
Broken appliances
Car repair

When you suffer from an unexpected and expensive event, your emergency fund is what will prevent you from taking the financial blow. The amount of money you save towards your fun can vary. But keep in mind that it takes around 9 months to find a new job after being laid off. As a result, you should save approximately 9 months’ worth of income if you think you might suffer a job loss in the future.

Paying off debt

Paying off your debt is one of the most important financial goals. After all, no one feels comfortable knowing they owe banks and people a large sum. You can pay off your debt by committing to monthly payments. But remember not to borrow even more money – this will only add to your debt and drive you further away from your goal.

Saving for retirement

Saving for retirement is a lifelong goal; the earlier you start, the better.

Retirement accounts are important because they provide you with much-needed income when you decide to stop working. You’ll have to continue working even past retirement age without a retirement fund.

Homeownership

Buying a home is one of the most rewarding goals you can achieve. Whether your goal is to pay off a mortgage, buy a home, or save for a down payment for a home, homeownership is one of the best financial targets you can aim for.

Paying off your car

This is a fantastic example of a midterm goal. Having a monthly car payment can really restrict your budget. As a result, it’s crucial to pay it off as soon as possible. Once you’ve paid off your car, use those monthly payments for other bills and savings. Don’t go back to the dealership to hop into another loan! Instead, research the best time to do it to trade in your vehicle and start planning for it. What you could do is save for a sizable down payment for a new car and drive your old car until you reach that financial goal. Or make it a goal to buy your next car – without borrowing money!

Invest in a college fund

Paying off student loans has become a common long-term goal. But parents can help by trying to save for their children’s education and college tuition. Additionally, if you already have student loans, you can pay them off quickly by paying more than the minimum amount every month and making bi-weekly payments.

Planning for fun!

Most of your financial goals will be about being responsible, saving money, and saving for any future challenges you might face. But this doesn’t mean you can’t also set recreational financial goals! Ensure you always aim for at least one fun goal. This could be planning a holiday to Italy, buying a flat-screen TV, or even buying designer clothing. After all, you’ve worked hard to achieve all your other financial goals, so feel free to reward yourself with something you simply want!

Benefits of Setting Financial Goals

Here are four benefits of setting financial goals:

Get a sense of direction

The right financial goals can give you a sense of direction.

What do you want to achieve?

Where do you want to be 5 years from now?

What’s your version of financial security?

Setting financial goals will help you get the answer to those questions. Additionally, knowing your goals will motivate you to reach them. Financial goals will also help you become more responsible and aware of what you spend your money on.

Know how much you need to save

Another benefit of setting financial targets is that they’ll tell you how much money you need to save and when to achieve your goals. Additionally, setting financial goals means quantifying your targets, making them easier to accomplish since you know exactly what you need to do to get there. Ensure you track your progress toward your goals, and if things are progressing as quickly as you’d like, feel free to make changes to speed things up.

Know what strategy to use

Your financial goals can help you form a set of strategies. For example, if your goals aren’t that ambitious, your strategy could be saving a small amount of money every month. However, if you have ambitious goals like saving up for an overseas holiday, long-term leave from work, retiring early, or even buying a house, you’ll have to have a more complex strategy. You’ll need to cut some expenses and invest your money to reach your goals quickly.

Informs your career choices

The right financial goals can help you make crucial career choices.

For example, if you have ambitious financial goals like buying a new home, you’ll need to work harder to earn promotions, salary increments, and bonuses. Additionally, some goals might require you to work beyond the traditional 9-5 working hours. You can opt to start a side hustle, create your own business, or even work a weekend job. Ensure you don’t burn yourself out, though. While your financial goals are important, your mental health matters more.

Once you’ve set financial goals, ensure you align your career and wealth planning. This way, you can simultaneously move forward in your career and achieve your goals.

How To Set and Achieve Your Financial Goals

Identify Priorities: Consider both the practical, such as eliminating debt, and aspirational aspects of your life, like saving for a dream vacation or starting a business.
Categorize Goals: Sort them into short-term, medium-term, and long-term objectives, ensuring a strategic and balanced approach to your financial journey.
SMART Strategy: Employ the SMART criteria, making goals Specific, Measurable, Achievable, Relevant, and Timely, for a focused and actionable plan.
Craft Realistic Budget: Understand your income, expenses, and address financial leaks through a comprehensive budgeting approach.
Allocate Surplus Funds: Direct extra funds into a separate account aligned with your top priorities, maximizing your financial resources.
Regular Monitoring: Track progress, hit benchmarks, and reassess as needed to ensure you stay on the right path toward financial freedom.
Effective Goal Setting: Ensure specificity, measurability, and deadlines for each goal, fostering a clear roadmap to success.
Genuine Desire: Cultivate true desire for each goal, as motivation is crucial for overcoming obstacles on your financial journey.
Maximize Potential: Utilize goal setting as a key tool for high earners to achieve long-term financial success and build a secure future.

Mastering personal finance involves a strategic plan to achieve financial independence. By setting clear goals and crafting a comprehensive financial plan, you create a roadmap to reach your financial goals. Establishing a dedicated savings account helps safeguard against unexpected expenses, providing a financial buffer. Whether aiming to fund a college education or navigate through life’s financial complexities, a well-thought-out plan is key. Remember, the journey to financial success begins with setting goals, forming a solid financial plan, and staying prepared for unexpected expenses along the way.

Seek the advice of professional consultants who can create a personalized long-term financial strategy for you to reach financial success.

Consults can also:

Ensure you make the right investments
Create a wealth plan that suits your goals and willingness to take risks
Provide the knowledge and guidance you need to feel confident and in control of your future.
Help you identify what you’re spending most of your money on.

If you need help with investment planning and managing your financial goals, visit the Nour Private Wealth website today.

Nour Private Wealth realizes all clients are different, and their investment and wealth planning needs evolve. Our team provides you with the expertise you need across all facets of the wealth management spectrum. From portfolio construction and wealth planning to insurance and private capital, we make it our mission to cover all bases to ensure your financial security over the long term.

Our clients are retiring or retired investors and enterprising business people who demand strong investment performance and exceptional service. We provide wealth management services to high-net-worth investors, including entrepreneurs, professionals, family trusts, private charitable foundations, and estates. We also serve a select number of institutions as clients.

Our services include:

Insurance products and services are offered through Nour Insurance Services Inc., a related and separate company from Nour Private Wealth Inc. Only products and services provided through Nour Private Wealth Inc. are covered by the Canadian Investor Protection Fund.