Like Benjamin Franklin said, “if you fail to plan, you are planning to fail.” If you want to be successful at most things, you must have a plan. The purpose of planning is to create the best circumstances you can for yourself, in the future. In order to see that your future goals are achieved, planning is a critical process in developing those goals. Planning generally includes both short-term and long-term goals. This is just as true in finance, as it is in other areas of your life. Determining your long term and short term financial goals now, is the first step. Discussing those goals with your financial assistance planning attorney, is the next.
The steps to setting your financial goals
Most of us set our goals based on what is important to us right now, and what we expect may be important to us later on in life. Then, we strive to achieve those goals by taking steps that will lead us to them. Generally, there will be small goals that must be achieved first, in order for us to ultimately reach the larger, more important goals. That is why short term planning is necessary, not only to reach the early goals, but to prepare us for the later goals we must achieve.
Examples of short term and long term goals
If you recently got married, had a baby or started a new job, your short term goals may include buying a new vehicle or getting a larger apartment. Buying a new home can also be a short term goal, depending on your circumstances. When buying your first home is a long term goal, your small term goals for accomplishing it, typically include searching for the right piece of real estate, obtaining a loan, and moving in. When you think about college tuition for your children and your own retirement, that is when long term planning is required.
How to recognize a “short term” goal
Short term financial goals are usually smaller, easier goals that need fewer financial resources to accomplish. If the goal is to buy a new car, you only need to find the one you want and obtain an installment auto loan. An installment loan is typically paid off in a few years. Goal accomplished. Issues such as inflation and uncertainty are not generally an issue with short term goals. The same cannot be said for retirement planning, however.
How are long term goals different?
Long term planning, in an effort to achieve long term financial goals, is a more complicated process. It is necessary to formulate a long term plan that takes into account both current and future needs. Long term planning also requires consideration of changes in the cost of living and other fluctuations in the financial climate, which are likely to occur. Long term planning usually takes place along with your short term planning.
Just like with short term goals, long term planning often involves breaking a larger goal into small, achievable goals. Your financial planning assistance attorney can help you with distinguishing the types of goals you need and how to plan for achieving them.
If you have questions regarding short term and long term goals, or any other financial planning needs, please contact the Schomer Law Group either online or by calling us at (310) 337-7696.