Setting long term financial goals is a smart idea and will help you live the life you want to live in the future! No matter where you stand today financially, setting goals and having a strategic financial plan to help you go farther in the future is totally possible.
Or perhaps you finally want to pay off all those pesky student loans that are hovering? No matter what, setting long term financial goals will help you get there.
I believe in the power of these goals so much that I wrote this article as a sort of small guide to help you set (and stick with) any long-term financial goals that you may have.
You’ll also want to read this article on short term financial goals
Difference between Long Term Financial Goals and Short-Term Financial Goals
Both long term and short-term financial goals are extremely important when people are making decisions for how their money will be spent. While both valuable, it is smart to learn the difference in these goals so that you can successfully complete both.
The purpose of a short term financial goal is to help save money as quickly as possible. This helps the saver build their confidence and establish a foundation to help them successfully complete any long-term financial goals.
Maybe you want to buy new leather couches so you pick up a side hustle to earn that extra thousand to pay for them.
When you are setting long term financial goals, the most important thing to remember is that it is going to take a lot of time. Most of these goals will take years, if not decades.
Typically, the amount of money saved is much larger and much more patience and consistency is required.
Examples of Long-Term Financial Goals
Paying Off Your Mortgage
One of the most freeing long term financial goals is to have the ability to live in your home for free. The best way to do that? Set up your life so that you can live mortgage free.
There is more than one way to help you achieve this goal and the reward is beyond amazing. I know for me and my family, one of our biggest expenses every single month is paying for our home.
To be able to stop paying that large bill and put those thousands of dollars elsewhere would be a dream come true!
Saving For Retirement
Saving for retirement is something that you should always be doing. No matter what else happens in your life, one of the guaranteed things is that you will want to retire.
What is important is that you are able to retire when you want and be able to afford it. Those who want to obtain financial freedom so they can retire early MUST set goals!
The industry standard is to save between 10-15% of every paycheck into your 401k or Roth IRA- especially if your work meets you at a certain percentage. But if you want to retire early, save as close to (or more) 50% of your income as you can!
If you haven’t already, contact your HR department and start putting away money so that you can live comfortably later on.
Starting a Multi 6 Figure Business
Starting your own successful business is kind of the ultimate dream, right?
If you have the entrepreneurial spirit and a strong work ethic, then one of your long-term financial goals may be to start a business. Turning a side hustle into a real, multi 6 figure income is extremely difficult, but very possible.
Much like achieving a long-term financial goal, running a business that can make a lot of money takes time and dedication. Not only are both of them possible, but with consistent effort, you can be extremely successful.
Get Out Of Debt
Depending on where you are starting from on your financial journey, getting out of debt may be one of the most important long-term goals that you can set.
So before you can begin to set any more long-term financial goals, focus on successfully paying off as much debt as you can. Using Dave Ramsey’s baby steps plan, you can get your debt paid off and begin working towards bigger financial goals for our family’s future.
Break It Down as Far as You Can
Once you have your long-term financial goal set, it’s important to break down that goal as far as you can.
Let’s say in 20 years you are hoping to retire so your financial goal is to have two million dollars saved. For this goal, you will want to break down this goal to smaller checkpoints so you know if you are on the right track.
The checkpoints could be every 5 years, you need an additional half million saved, or every year you need to have $100,000 saved.
Once you know the number that you need saved each year, the next step is to figure out how you are going to get there.
Are you going to invest your money? How about looking into your work’s 401K (oftentimes, they will match up to a certain percentage)? Maybe you will sell your family’s lake house that no one ever visits anymore?
Breaking down your long-term financial goal into smaller, more manageable goals can help you successfully set and complete any long term financial goals.
Tricks to Sticking with your Long-Term Financial Goals
When working toward your long-term financial goals, it is important to remember that this journey is a marathon, not a sprint. If you want to be able to set and stick with your goals, make sure you implement some of these tricks to help you stay motivated until the very end.
Keep reading to learn some of my favorite tips and tricks to sticking with your long-term financial goals…
Dave Ramsey gives a wonderful analogy of long term financial goals and the Tortoise and the Hare. He looks at who really won in the long run- the slow tortoise- because he was slow and steady. Those who are patient with their money end up winning in the long run.
Whether you are paying off debt or waiting for that investment to skyrocket, taking it slow and consistently doing what is necessary will help you achieve your financial goal.
The time will pass anyways, so keep working toward that goal and try not to get sidetracked.
Make sure your goal is SMART
One of the most important factors in successfully completing financial goals is to make them as clear as possible. Sure, you could say ‘I want to be a millionaire someday’, but that doesn’t lay out a concrete goal that will help you get there.
When it comes to long term financial goals, you need to make sure that they are SMART goals (specific, measurable, achievable, relevant, and time-bound). Doing this is the key to success!
Instead of a broad, unmeasurable long term financial goal, you need to get as specific as possible. Something like ‘I will have a million dollars in my checking account by the end of 2035 by saving XX dollars each month’. That is a clear, laid out plan that breaks down your goal into smaller, achievable steps.
Check in with Someone
If you want to successfully achieve your long-term goals, then having someone to check in with periodically is an excellent tool to have. It could be a business coach, your partner, or a good friend that can help keep you accountable.
Set up a monthly meeting (it could be a quick phone call) and be 100% transparent with them no matter what. Having this accountability will help you become more successful and motivate you while you are working toward your long-term financial goals.
Have a Firm Budget
Having a firm budget is an essential part in setting long term financial goals. No matter how much money you earn each paycheck, a budget can help you decide how that money will be spent.
If you aren’t sure where you should start with a budget, that’s okay! It can feel very scary when you first start looking at creating a budget. It is so important that you begin using a budget that I have an entire blog post on how to create a financial budget.
Create an Emergency Savings Fund
Anyone hoping to successfully complete any long-term savings goals needs to consider an emergency savings fund. This fund should have at LEAST 3 months worth of living expenses, but I recommended 6 to be on the safe side.
The purpose of an emergency savings fund is to help pay for those little unexpected moments in life that cost money, unexpected job losses or illnesses.
It’ so important to be prepared when these unexpected things come up (look at what happened to so many people in 2020!!).
Look into your insurance plans
The purpose for having insurance is to make sure that all of your bases are covered. When you are going to start looking into setting (and keeping) long term financial goals, then you want to make sure that you are able to have your assets covered.
Take the afternoon and look over all of your coverage. Oftentimes, it is outdated and doesn’t reflect exactly what you need insurance on.
Going through your auto, home, and any other insurance will help you stay covered in case something does come up.
Setting long term financial goals is a smart choice to make. Whether you want to pay off some student loans, start saving for retirement, or live mortgage free, these sorts of goals are wise.
Think of it this way- the time will pass either way, so why not set yourself up to be financially well off in the future?
You can set (and stick to) any long-term financial goal and you will be pleasantly surprised at the results. So, what are you waiting for?
What are your long term financial goals? Tell me in the comments!