Capture your long-term goals in your to-do list.
Long-term goals are those that take more than a few months to accomplish. They are the ones that will move you and your family a step away from being broke to being financially secure. Our plan for achieving long-term goals is built around the idea that a well-managed to-do list is an important part of every phase of our life.
Long-term goals should be the ones that require significant planning and investment. And long-term goals can be broken down into actions items, just like your short-term goals.
By adding the goals to your to-do list and tracking them, you set yourself up for success. Each time you add an item to your list, your brain will give you a dopamine boost, and you will likely strive to complete the task or achieve the goal.
Don’t bury your long-term goals.
If you’re like me, you’re probably an achievement-oriented person. You may have many short-term financial goals that are easy to achieve, such as lowering your car insurance premium or paying off your credit card debt. These are all important goals to reach, but they don’t contribute to your overall financial situation as much as the big goals like saving for retirement.
Dedicate certain days of the week to long-term goals.
When you are taking the steps to reach important long-term financial goals, you can set aside a few days of the week to devote your time to those goals. That way, you’ll be able to be more productive and to accomplish more. By re-prioritizing your time in this way, you’ll make your long-term goals feel more immediate and attainable.
This is one of many small steps that you can take to save thousands of dollars in your life.
Prioritize your long-term goals properly.
The reason why some of us are so poor with finances is because of our short-term focus. We spend our money on what feels good now and fail to consider if we can afford it. Our expensive Starbucks Latte certainly feels good when we get it, but can we really afford it on an everyday basis?
The first thing you have to do to correct this is to look at your short-term goals and where they fit in the context of your life. Some of us prioritize our short-term goals above all else and as a result, we are working hard for the rest of our lives. We spend day after day, month after month, year after year working on a salary or commission to buy all the things we want, and then we find ourselves working until we are 65, 70 or even older. We would have to be millionaires before we have the freedom of time and money to enjoy our life to the fullest.
Since high income alone is not enough for us to be happy, and it's too late for making millions, we need to shift our focus to long-term goals and finish the work, the education and the practice to get the high-income job. Then we need to budget our money towards our goals so that we will have the freedom to start enjoying life before we retire.
Build Your Emergency Fund
People are often surprised to find out that most financial experts suggest that you start your saving journey with an emergency fund.
I’m not going to bore yo with the numbers, but ideally you should have to cash in the bank to cover your expenses for at least six months.
Why? Because if you have a stable source of income and you pay your bills on time, you should be able to pay your bills for six months if anything unexpected happens.
Depending on your situation and how much money you need to have ready access to, this number may vary, but six months is the general rule of thumb.
Okay, you’re probably thinking… this is such a really long horizon to be thinking about. At least I have a job, so I’m not worried.
However, having an emergency fund is completely different from just saving for a rainy day.
I remember having to call up some month-to-month expenses one time and having at least ten different saving accounts on auto-deduct to cover them … including my mortgage. Talk about inconvenient!
Wipe Out Your Debt
Most people take on debt when they aren’t making ends meet. They use credit cards to pay for necessities like food and gas, medical house or car expenses or school tuition. This debt load increases until it gets out of control. In the end, wiping out your debt may include selling off your car or home, and you may have to declare bankruptcy.
Rather than let your debt overwhelm and bury you, you can take control and pay it off. You could reduce your other expenses and pay off your debt with additional payments instead of cutting back your expenses. You could also switch to a high-yield savings account that earns interest and gradually pay off your debt with the interest that your money earns. Whatever method you chose, you need to monitor your progress regularly to ensure that you are making progress.
Paying off your debt is the first step to achieving personal wealth.
Start Investing for Retirement
The first step is to create a retirement savings plan. A convenient way to do this is to work with a financial advisor who can help you develop a strategy for long term savings and retirement.
Next, create a monthly budget that separates your current expenses from expenses used to achieve your long-term goals. For example, save money for getting a car, a down payment on a house, and other long-term goals in an account that you can only use for these purposes.
Here are three other tips to reach your financial goals:
Identify what you need. If you’re getting ready to go out and buy something, ask yourself: Do I need this? Is this an opportunity I’m taking advantage of, or is this a want? If you can’t answer yes to both questions, you don’t need it.
Get rid of luxuries. Look for the unnecessary expenses that are taking your money against your will. This can be expensive mortgages, car loans or monthly gym expenses.
Find ways to get more income. Finding different streams of income is the key to having money available when you need it.
Start Saving for Other Long-Term Goals
Now that you know a little more about setting your short-term goals, let’s take a closer look at the long-term goals and how you can start saving for them today.
And this is where the mental accounting really kicks in. It is very easy to simply shift your short-term money to a savings account or an investment account. The money transfers are instant, and you never feel the pain. Your money is safe.
Long-term goals are completely different. When you look at them in their entirety, saving for 30 to 50 years is a long period of time. It is likely that you will not be able to see yourself at the end of that long time frame. That means that you are going to have to continuously plan, prepare and adjust to stay on course and continue saving.
The simplest way to keep yourself on track is to mark the long-term goals on your calendars and refer to them often. Placing your long-term savings out of sight but always in mind helps reinforce the need to consistently make progress toward the eventual goal.
Discover and focus on your motivations.
Before you can set up your long-term financial goals, you need to know what motivates you and what drives you. Some people are naturally fiscally conservative. Others are more money-motivated.
Set up goals based on what your personal motivations are for money. Everybody is different. What motivates one person may be different than what motivates another. For example, some people are motivated to get out of debt as fast as they can, while others are motivated by the idea of early retirement.
Long-Term Goal Examples
These are things you’d like to have completed in five to ten years. Long-term financial goals may need you to make significant changes to your lifestyle. Having a clear plan in place can help you deal with these changes. You can think about goals like:
- Buying a house
- Purchasing a new car
- Retiring early
- Starting a business
- Paying off your student loans
- Earning a degree
- Building a solid emergency fund
- Learning a new skill
These are difficult to achieve, but if you start with some baby steps you’ll build momentum. Think of some slight insights or changes you can make in your financial life today.
Fincon Community Long-Term Goals
FinCon is a financial blogger’s conference, and every year, they ask their community to indicate what their financial goals for the next 10 years are. The responses are quite varied, but there are quite a few interesting takeaways. We’re focusing on their top 10 goals including some commentary from the authors of the responses and research on how attainable these goals are.
My Lifetime Goals
In the last 15 months, I have accomplished more than I have in the last 15 years. Why? Resolved this year to add focus and intention to my everyday habits. By quietly and decidedly replacing a lifetime of short-term actions with habits that clearly support my long-term goals, I finally feel like I am winning at life.
For instance, instead of saying that I want to work out 3 times/week, I now say I will only workout on Mondays, Wednesdays and Fridays. I know that if I am consistent with my schedule, I will develop a habit where I just get it done.
See, short-term goals are transient because they don’t have a natural follow-up or motivation built in. Yet, they’re so uncomfortable! When you completely commit to a 1 or 2 week goal, you are setting yourself up to choke for that interim period and everything that follows.
Instead, look at the habit-oriented choices that you have had success with in the past. If you have a horrible, I mean horrible, track record for going to the gym, but made it your routine for one month when you began a weight loss adventure, why not try to keep up that same routine out of the gate? That’s how I started my healthy choice habit.
Here’s your homework
I know I’m asking quite a bit, because I believe this assignment could easily change the course of your life. I’m not just talking about saving for a new car or having the cash to pay off your credit card statement at the end of the month. I’m talking about the big “MEGA” money. That’s right, the five, ten, whatever million dollar ball game.
Write down your 10-year “money goal” or your “Mega Money Goal.” This is a goal that would require a substantial amount of money.
Please take the time to do this assignment for yourself. It’s important that you follow through with writing down that goal, because as they say, “A goal without a deadline is a dream.” This is all about deadlines. And Mega Money is all about deadlines.