Personal Finance 101

Steps in Financial Goal Planning, Examples of Short-Term, Intermediate-Term and Long-Term Financial Goals

Steps in Financial Goal Planning

  1. Write down all of your life goals-both financial and non-financial specific that will require monetary resources (see examples below)
  2. Organize goals into short-term (approximately 1 year), intermediate-term (approximately 2-5 years), and long-term (more than 5 years) goals.
  3. Rank goals in each time range according to priority.
  4. Assign a cost estimate to each goal and list how much you already have saved toward the goal.
  5. Create a specific, detailed plan for how to achieve each goal.

Examples of Short-Term Goals

  • Create and organize a financial planning binder
  • Create and utilize a financial record keeping system and budget 
  • Create personal financial statements, including current personal net worth and cash flow statements 
  • Analyze and adjust insurance coverages (health, disability, life, auto, homeowners, personal umbrella)
  • Create an emergency fund of $1,000-$5,000
  • Increase emergency fund to a cash reserve of 3-6 months expenses 
  • Save for a wedding, baby, divorce or other life event 
  • Save for a vacation travel 
  • Get spending under control to be able to contribute more to charity 
  • Make a debt pay-down plan and start eliminating all consumer debt.
  • Go back to school and finish degree/get add training
  • Start a new expensive hobby-photography, diving, etc 
  • Minimize income taxes 
  • Invest 5/10% of gross pay in employer 401(k) plan 
  • Draft a will or trust for estate planning. 

Examples of Long-Term Goals

  • Pay off home mortgage and be 100% debt free by retirement 
  • Fully fund retirement account to be able to have an income of 85% of pre-retirement income
  • Retire by age 45/50/55/60
  • Become financially independent, being able to totally live off passive income 
  • Become a millionaire
  • Fully fund college savings accounts for children 
  • Leave an estate for heirs 
  • Save for long-terms care expenses to enable in-home care
  • Fund a trust for a disabled child 
  • Fund a buy-sell agreement for my business 
  • Leave charitable bequests upon death to a church or non-profit charitable organization

Example of Intermediate-Term Goals

  • Pay off all consumer debt (credit cards, student loans, auto loans, home equity loans and lines of credit)
  • Save 20% toward a down payment on a home
  • Save to pay for a home remodeling or home improvements with cash
  • Purchase a new/used car with cash
  • Make another large purchase in cash-boat, plane, art, motor home, rental property, etc.
  • Fund start-up expenses to start my own business 
  • Save to be able to switch jobs to a less stressful one 
  • Be able to quit working and be a stay-at-home parent 
  • Support aging parents financially