Earlier this week I rambled on about the importance of setting goals. And now onto the nitty gritty — the actual goal setting!
When Johnny and I are setting short-term and long-term goals, we always flesh out the long-term goals first. And how do we do that? Well we ask ourselves a few questions, the very first of which is What’s our end game? This question is a favorite for Johnny and me because it helps us focus on the finish line. Our answer to this question would sound a little like this:
We’ll be able to retire and have financial independence, such that we’re able to enjoy some of the fruits of our labors (literally — our children and our grandchildren). We’ll still have some form of money that’s working for us, whether it’s through investing, rental properties, etc., so we’re not relying on a lump sum of money to get us through our retirement years.
Well, once I write it out, I realize just how boring our end game sounds. Geez. Sorry, no dreams of sailing around the world. I’m sure we’ll do some exciting stuff (all our kids tattooed on Johnny’s chest, perhaps?), but the specifics are yet to be determined. What matters is that we have a general idea to work toward.
The next step is figuring out how we’re going to get there. And so onto the long-term goals, which in our mind is anything that’s more than a year away. Here are some of ours:
- Buy a house with a significant down payment.
- Own our future house outright.
- Buy a second car with cash. (Sorry, Vespa, you don’t count.)
- Save enough money to pay for our children’s college education.
- Travel abroad.
- Have multiple streams of cash flow.
Your long-term goals may be more or less specific than ours. Maybe you want a very specific kind of car or house someday. Maybe you want an exotic puppy or some kind of plastic surgery. No judgement here. If you’re having a hard time coming up with your long-term goals, here are some other ideas:
- Live in [insert incredible vacation spot here].
- Pay cash for a [expensive sports car].
- Be able to support parent/grandparent/sibling financially.
- Pay off school loans/mortgage/credit card.
- Open my own business.
- Quit my job.
Really, with long-term goals, the sky is the limit. But Johnny and I only list items that we truly intend to accomplish someday. Long-term goals are our dreams that we are 100% set on making into realities.
Once Johnny and I had set those lofty goals, we had to come back down from the clouds and focus on the task directly in front of us, which is where our short-term goals come into play. And without further adieu…
- Stick to our budget this month.
- Save up an extra $25k in 2013.
- Open up a Roth IRA (we actually already did this one recently!).
- Start a 529 College Savings Plan for Baby Girl (this should have happened many months back).
- Buy life insurance.
- Find a cheaper cell phone plan.
So there ya have it. Short-term goals are pretty much anything we’re working towards this week/month/year that involves our finances. Your short-term goals could be similar to these, or very different. Here are some other possibilities:
- Find a job that pays more/ask for a raise.
- Pay off my credit card.
- Find a cheaper apartment to live in.
- Quit giving money to [insert friend/relative here].
- Start a budget/refine my budget.
- Find freelance work.
- Cancel cable.
- Open up a joint checking account with my spouse.
Once Johnny and I were clear on our short-term goals, it became easier to stick to our budget. We don’t want any expenses that could jeopardize reaching our short-term goals. Really, the short-term goals are the building blocks of financial success. They may seem insignificant. But when we stick to them day after day, our financial outcome will be a complete 180 from what it would be if we didn’t stick to them. So short-term goals deserve a hefty pat on the back because they’re pretty cool.
What are some of your short-term and long-term goals? Are they similar or different from our own?