Many people set goals to achieve their desired results, such as weight loss, professional advancement and athletic performance. You can also use this strategy to obtain your short- and long-term financial goals. While short-term financial goals can usually be accomplished within a year or two, long-term goals may take years to come to fruition. This is why creating a 10-year financial plan is imperative to reach long-term goals and dreams.
Identifying Your Goals
When creating a long-term, 10-year financial plan, you need to think about what you want for your individual future. Everyone has different life priorities, so everyone’s financial goals may be different. What works for your neighbor or brother may not fit your dreams or vision of the future. Start by making a list of what you want your life to look like in 10, 20 and 30 years. Even though you may not be creating a 30-year plan, you’ll need to make headway on it in the next 10 years. Some common examples of long-term financial goals include paying off debt, buying a home, paying for your children’s college and retiring.
Setting the Goals
After you’ve established your personal financial goals, make a list of your top five goals and rank them in priority. Then write down when you hope to achieve each goal, as well as how much each goal costs. Calculate how much extra money you have each month to put toward your goals as a whole, and then figure out how much that adds up to in a year. Create a goal timeline by starting with your number-one priority goal. For example, if you have $20,000 in school loans and you want to have it paid off in seven years, you’ll need to pay around $3,000 a year ($250 a month) for seven years to reach the goal.
Finding Resources and Options
Spend time working on each goal individually to identify resources and options that will help you reach them. For example, if one of your goals is to retire at age 55, you’ll need to research all your options for retirement savings and investments. Some examples of the types of retirement plans you need to learn about are employer-sponsored plans, such as 401(k)s; individual retirement plans (IRAs) and stocks or mutual funds that will mature around your desired retirement year. Compare the advantages and disadvantages of each type of plan and meet with a professional financial adviser to find out which one is best for your specific financial circumstances.
Keeping on Track
Setting the goal is only half the work – now you have to stay on track and meet your monthly and short-term goals to achieve the long-term results. If one of your 10-year goals is to save $50,000 for your child’s college education, you can set up a separate savings account and have money from your paycheck automatically deposited in it each month. Another tip is to write down the reasons why you set each goal and then go back and read the list each month to remind yourself why you’re making sacrifices today for tomorrow.
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