Financial success is not a matter of luck. It’s something that you create for yourself by making the right decisions and setting long term financial goals to help you get there.
It is important that you have long term financial goals to help guide your finances. These are different to short-term goals, which are by their very nature shorter in time and smaller achievements.
For example, if your short-term goal was to start an emergency fund and save $1000 into it. Then the long term goal would be to save up enough money in emergency funds to cover 6 months worth of expenses.
Not something that can be done in a matter of months for most of us on average or low incomes.
Long term goals are different from short term and mid term goals because they are more broad and are aimed at your long term financial future.
In this article, we’re going to take a look at the best financial goals that will get you started on the path to achieving greater wealth and security in your life through a long term strategy for your finances.
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what are long term financial goals?
Long term financial goals are the aims or targets that you have over a long timescale, generally anything longer than 5 years.
why are long term financial goals important?
Long term financial goals are important because they help you keep your eye on where you want to go with your finances. If all we did was focus on the day to day and week to week. We wouldn’t really have much of an idea as to how our outlook is changing over time.
Having long term financial goals helps you keep your focus. And lets you know if the money decisions that you are making today will help towards achieving those goals in a few years time.
One of the money truths that we all need to learn is that we need to control our money otherwise it will control us. Goals are a way to take control.
Why do I need long-term financial goals?
You need to set financial goals, long, short and medium, because these will help to guide your finances by giving you something that is more concrete and specific in the short-term.
As well as helping you achieve what can sometimes seem like daunting or overwhelming personal finance goals. Setting goals and working towards them is also a great way to start breaking bad habits and making better ones.
Related post: Why You Need To Be Financially Sound
11 long-term financial goals to achieve financial freedom
1. create a long term financial plan
One of the most important long term goals you should have is to create a positive and beneficial financial plan for your money.
If you want to save for a house, retirement or any other long term financial goal, you need to have an effective plan in place that will help you reach those goals faster.
By creating this type of financial plan, you are putting yourself in the best position possible when it comes to saving money.
A financial plan gives you a clear idea of what your own goals are. How much money you need to reach them and where your hard-earned dollars should be going each month in order for those big dreams to come true!
Having this type of long term financial goal in place will help keep you accountable, motivated and ensure that your money goes where it needs to go so those big dreams can turn into reality!
2. better your career
Maximizing your income potential is both sensible and a something to aim for. If you want to save money, often the only way to do this is to increase your income. This means not settling forever in your current job.
Most employers don’t expect you to stick around for life. Being open to new opportunities can lead down different paths towards more career success and a salary to match.
3. get rid of all non-mortgage debt
The third long term financial goal that you should have is getting rid of all non-mortgage debt. This means being completely out of credit card debt, car finance and student loan debts.
Most forms of debt are bad because they are high interest. They eat away at your ability to manage your money successfully and save for the future.
Debts like these are you spending today what you earn tomorrow. Basically using loans and credit card debt to pay for things you have not saved up for. It is you robbing your future self of the abilty to buy things and to achieve financial success.
If you are spending $500 a month on debt repayments (let’s not even talk about how much of that is just interest) that is $500 you cannot save for your future or spend on things today.
It’s $500 you cannot put toward more important parts of your long term financial planning. Like buying a home or creating a decent sized retirement pot.
There are many benefits to being debt free, keeping more of your own money is just one!
4. buy a home
Buying a home is something most of us aspire to from a very young age. But with high housing costs in many areas, it’s not easily achievable. It requires saving up for a down payment on the property and then putting in place another form of debt. A mortgage.
But this type of debt comes with massive benefits when compared to other loans. They will be very low interest rates (in most cases), you are buying your own piece of real estate and no more grotty landlords!
5. become mortgage free
Whether you are on a high or low income, getting rid of your mortgage early can be very beneficial. It may not seem like a big deal to some, but you will be surprised by how much more money is left over at the end of your month if there isn’t an additional payment.
Being mortgage free can also open up doors for financial freedom that you never had before. It allows so many different opportunities with what to do with your extra income.
For example, you may not have had the opportunity to take a vacation due to too many bills making demands on your paycheck.
However, since your mortgage is paid off and there was no payment every month, it might be possible for you to go on that much needed break from work or family life.
Now is a great time to start thinking about how long term financial goals might benefit your life. And if now would be a good time to get rid of that mortgage and get started on other goals.
6. save for retirement
Retirement planning is something many people put off because it seems such a long time in the future. Even if you’re young and just starting out in your career, investing in your retirement account is something that will pay off long term.
When you are 20 or 30 years old you feel like your retirement age is decades away. But the years pass very quickly so it’s important at whatever age or stage of life that you are in now, don’t wait another minute! Start saving for your retirement today.
Not sure how to make a financial plan and save for retirement? Check out my post on the best finance books for beginners, just one of these books will help you plenty.
7. save for college
The most important step in your childrens future is setting up long term savings. Children can be expensive, and college education is an ever increasing cost.
This should come as no surprise. But so many parents skip this part of saving for their children because it feels like it’s too early or unnecessary at the time.
However, it is important to start investing for your children’s college education as soon as possible. This will guarantee that they have a head start on the costs of college and won’t be overwhelmed when they get older.
8. make an end of life plan
One good long term goal you should have is to make an end of life plan. This can be difficult for many people, but when it comes time to do this, you will feel much better if you are prepared for the situation.
You can store all your documents in a safe place like a safety deposit box or keep track of them on a computer so you can access them in case of emergency.
You need to think carefully about your will, who will benefit, who will manage and distribute your estate. What your end of life plan looks like in your 30s could be very different to when you hit your 50s or 60s.
Life happens, things change, you change, so do review it every so often.
You should include a designated power of attorney for your finances, health care proxy, and living will. This way if something happens to you, your family members won’t have to worry about what they need to do moving forward.
Having an end of life plan might seem far-fetched but it is important for everyone to have because you never know when your time is going to be up.
9. become financially independent
Being financially independent means having enough cash to cover your living expenses, which could come from various sources like pensions, savings account and social security.
If you have a source of income (that doesn’t reply on you working to receive that income) that covers all your spending habits then you are financially free.
This is why financial independence should be on the list of everyone’s long term goals because it gives you room to breathe when it comes to money.
This is also why I believe that you should aim for this goal even if it takes a long time because the sooner you can achieve financial independence. The more options and opportunities will be at your disposal.
Not only could these include working in jobs that make you happy. But they could also include taking risks by starting a small business. Or giving much of your time to voluntary causes close to your heart.
More freedom to make your own decisions will be a great benefit of achieving financial independence.
10. build up substantial investments and savings pots
Some of us in our 20s or 30s might not think about the long term, as we’re still focused on enjoying ourselves and having a good time.
However, when you get to your 40’s and 50’s still paying rent, still aiming to be debt free, it can be really difficult for you if something happens which could change your life forever such as losing your job or even getting seriously ill.
By building up your investments and savings now, you can help protect yourself from any of these events and also enjoy a more comfortable retirement.
While making sure you have a good income is important. Making sure you are also investing your money in assets that grow and provide passive income is also important.
You don’t have to be rich or have a certified financial planner. But understanding how the markets work and how to invest effectively is the knowledge and financial literacy you need to achieve.
It can be difficult for some people to think about the long-term when they get their first job or even start a family. Building up your savings and investments now will mean that in future life becomes more comfortable.
11. retire early or go part time
Retiring early is a great long term goal to have. For many people, there comes a point when they are ready to retire and never work again. While this may not be the right choice for everyone it certainly has merit as something to shoot for in terms of your finances.
Some considerations you might want to think about when it comes to retiring early include:
- If you are retired, how will that affect your income?
- What will you live on?
- Will you need to move somewhere cheaper?
How much money are you saving now and how will your finances change if this is one of your goals?
Is there something else you can do now in order to have more options when it comes time for retirement?
Perhaps a side job or additional investments could provide some extra cushion so that you are not as pressed financially once retired.
Related post: 20 Frugal Living Tips For Seniors
How do I set long-term financial goals?
There are different ways for you to set a financial goal depending on your personal tastes and finances.
Some people like visualising their goal by drawing it out, others create vision boards with pictures of what they’d like or even write them down. If you’re more of a spreadsheet person, then that works too!
How do long term financial goals help me?
Long-term finance goals are important because they give us something to work towards. And motivate us during the day to day slog that is life with jobs, family commitments and other responsibilities. It can also help you to save extra money and spend less in the long-term.
What are some examples of good financial goals? What are some bad financial goals?
Good finance goals would be ones that give you a clear picture of where you want your life to go such as buying an investment property, building your retirement savings, creating multiple income streams or saving for a down payment on your first home.
Bad finance goals can be ones that are too vague such as ‘cutting expenses’ or ‘not spending on luxury items’. Both of these examples could mean anything from saving no money at all to only buying the bare minimum of groceries. Which isn’t healthy or sustainable on a monthly basis.
How can I achieve my long term finance goals?
To be able to work towards your financial goals, you need a plan. Long term goals need you to be thinking long term financial planning. Planning for 10-30 years ahead.
Get started by thinking about where you want to be in 10 years time, what do you want to be doing? What do you aspire to have achieve?
How can I help motivate myself to work towards my long term finance goals?
You can keep yourself motivated by creating a list of financial goals that you would like to achieve and then rewarding yourself with small treats or rewards for achieving each one.
For example, when (not if) you complete the first goal on your list, treat yourself to that new gadget you’ve been hankering after. Or when you complete the fifth goal on your list treat yourself to a nice meal out.
What are some long term financial goals I can have?
In addition to the above, some examples of good long-term finance goals could be paying off your auto loan or saving up for a vacation home.
These require different amounts and timescales, but having a long-term goal to work towards will help motivate you in the short term.
What are short term financial goals?
Short term financial goals are the aims or targets that you have within a shorter timescale than most of your other financial goals.
For me, short term goal setting means anything from a few days up to 12 months. Creating a $1000 emergency fund is a classic short term goal.
What are medium term financial goals?
Mid term financial goals are basically the same as short-term goals except that they last for a bit longer. These can also include some elements of your long-term goals, that can be accomplished in less than five years.
Setting financial goals in the short and medium term range help you keep your eye on where you need to go with your finances. Rather than just focusing on reaching a certain monetary target within a specific time.
A common way to set medium term financial goals is to identify part of a long term goal you have and make that into a medium term one. For instance, your long term goal might be to pay off your mortgage completely. But it’s $200,000 so not going to happen anytime soon.
Break that goal down into smaller goals that you can achieve in the next 5 years. You might set yourself a goal of paying off $30k in 3 years or $10k in one year. The goal setting you do is personal to you and your financial situation.
Using a medium term financial goal as a stepping stone towards a large, long term financial goal helps you keep focused and feel the achievement much sooner.
Make your goals SMART
SMART is: specific, measurable, attainable, relevant and time-bound. A goal is not a SMART one when it’s too broad or if you don’t know how to measure your progress after the first few steps.
For example: “pay off my student loans as soon as I earn more money” isn’t a SMART goal because it can’t be measured. You need to define when you will be debt free and exactly what you will be paying toward your loans each month.
example of a smart financial goal
“Pay $50,000 off my mortgage in 6 years (give a specific date)”.
- It is specific,
- measurable (we know when it will be reached and how much we need to save every month),
- attainable ($50,000 is a large amount money but you know your finances better than I)
- relevant (you want to put this money towards reducing your mortgage)
- and time-bound (you have a date by which you plan on achieving this goal).
How do I write out my goals?
Writing your goals down can be as simple as putting them in a text document on your computer, phone or laptop. It can be as elaborate and creative as you like! Writing them out is an excellent way to inspire yourself and take action in the present moment.
You can write them out on a vision board, in a money journal or on paper. Keep these someplace visible, whether in your kitchen, your wallet or hanging up above your desk.
Make your long term goals your priority today
I hope this post has given you some ideas of long term financial goals that are important for your future. It’s never too late to start taking steps towards these goals.
Take a minute to review the list and see which of these goals you have not yet set up and take steps to get them built into your financial plan. Also, consider what other goals might be right for you.
And don’t forget about short-term goals, they’re just as crucial in building up an emergency fund or saving money to buy something nice later down the line.
The key here is to balance your money plans between what you feel you need to achieve soon and what is going to take much longer.
Both need planning for and action taken.
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Last Updated on 14th February 2022 by Emma