How to iron yours for 2022

How to iron yours for 2022

I once gave a presentation to a group of (unfortunately disgruntled) employees on goal setting and received feedback on the topic (not on my presentation skills, although they were probably doing reference to both):

Contributor – MarketBeat

  • “Goal setting is boring.”
  • “I like to live in the moment.”
  • “Boooorning.” (Yes, there were multiple overlapping comments.)

The American Psychological Association found that in 2021, money was high and “somewhat significant” levels of stress for 61% of Americans. So why not implement personal financial goals? If planning for the future can help alleviate financial stress, why not take care of it by setting three types of personal financial goals?

Let’s go over short, medium, and long-term financial goals to achieve exactly what you want, whether you want to start investing in cryptocurrency or setting a budget for the first time.

Three Types of Personal Finance Goals

The Financial Industry Regulatory Authority (FINRA) has already made it easy for you by identifying three types of financial goals:

  • Long-term financial goals: Long-term financial goals typically take more than 10 years to achieve and can refer to saving for retirement or paying off your mortgage.
  • Medium-term financial objectives: Medium-term financial goals typically take three to 10 years to achieve and can include saving for a down payment on a house or saving to start a business. Medium-term goals may also involve saving costs for college (depending on the age of your children).
  • Short term financial goals: Short-term financial goals should take less than three years to achieve and may include savings to renovate a basement or savings for a vacation.

Putting very clear deadlines on all the goals you want to achieve will help you identify concrete steps to get there. But how do you do that? Let’s find out.

How to Set Financial Goals in 2022

Let’s go through each type of financial goal one by one so there’s no question about when and how you want to achieve a goal.

How to Set Long-Term Financial Goals

Setting long-term financial goals doesn’t have to be daunting, although you may feel like you’ve been given the monumental task of charting your entire life on paper. Here’s the thing, though: if you think about it that way, you’ll always feel overwhelmed!

  • Step 1: Start by writing down exactly what you want to accomplish beyond the next 10 years. You might want to retire in Florida, save $2 million, sell your house, etc. Think carefully about what you want.
  • 2nd step: Write down what it will take to get there. If you have no idea, do some research on what you need to do to make it happen. If you need help achieving your long-term financial goals, hire a financial advisor to help you achieve them.
  • Step 3: Assemble the right types of assets to make it happen. For example, if you need an equity-rich IRA to achieve your $2 million dream, put it together.
  • Step 4: Put your plan in place, automate your investments to automatically contribute money every month, and monitor them over time.

Can’t find anything you want to do beyond 10? Its good. If you start by saving for your retirement, you can always add goals to your list later.

How to set medium-term financial goals

Setting medium-term financial goals can seem a little more confusing. After all, it can be difficult to figure out exactly what you might want three to ten years from now. You might want most “stuff” sooner than that!

  • Step 1: Consider goals you might have between three and 10 years from now and write down as many as you can think of. Maybe you want to pay off your debts or earn more money. Maybe you have milestones coming up in your life – a big birthday or an upcoming anniversary, for example.
  • 2nd step: Identify medium-term investment options that could get you where you want to be. You may want to put them in less risky investment options so you can take advantage of them when you need them. Many people will continue to place medium-term investments in well-placed stocks (but diversify them), certificates of deposit (CDs), corporate bonds, and other types of accounts. You can also choose methods that can help you – not investments at all. For example, you can choose the debt snowball method of getting rid of credit card debt (where you first pay off your credit cards at the highest interest rate).
  • Step 3: Make your investments automatic and monitor them to know their performance.

How to set short-term financial goals

Short-term financial goals are obviously the goals you will set for yourself to be able to access money fairly quickly. You will want to be able to access the money within three years. Here’s how:

  • Step 1: Write down any short-term financial goals you want to achieve (even if they don’t require you to open an investment account). For example, maybe you want to create a budget, create an estate plan, add to your retirement accounts, or earn more money. You can also write goals that do require you to set up a fund, such as setting up an emergency fund.
  • 2nd step: Determine how you are going to accomplish all of these short-term goals. Make your plans as clear as possible. For example, maybe you say you want to build your emergency fund by putting 5% of your money in a money market account. Or maybe you’ll start looking for a side hustle that will go straight into your investment account or ask your boss for a raise.
  • Step 3: This step always involves the follow-up process! Implement your plan and follow it through to completion.

Get your financial goals on track in 2022

Goal setting doesn’t have to be exhausting. Just spend an hour thinking carefully about your goals and do some research before the New Year. If you have a spouse, loved ones, or family members who might want to participate in your brainstorming session, let them. It can be a very productive way to plan for 2022 and your future.

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