Know How to Set Your Goal With a Ten-Year Financial Plan

source: vecteezy

Goals signify your future needs. By planning a goal, you can get financially secure and make your monetary decisions and investments insightfully. Doing so can generate returns over a particular period, thereby accomplishing your targeted goals.

To set a ten-year economic goal, you must first build a ten-year financial plan and prioritise the events of your life when you need funds. Keep reading to learn more about preparing a financial goal and its importance.

Financial goals refer to the targets pre-determined by an individual to accomplish in the future via adequate funding. They are your financial milestones, which you plan to achieve within a specified period. It comprises earning, spending, saving, and investment in fixed proportions matching to achieve your short-term, medium-term, and long-term milestones.

Your financial goals can include your children's education, increasing net worth, healthcare, travel, building an emergency fund, retirement savings, etc. Remember that a clear idea of the budget beforehand is essential to create funding.

Making financial goals helps individuals to be cautious while spending. Furthermore, it motivates people to increase their savings to achieve their objectives effortlessly. These goals help people to take their financial decisions mindfully while managing their finances concerning their future goals.

Step 1: Forecast Your Short-Term and Long-Term Future

The foremost step to setting up a financial goal is to foresee the type of goal you want to achieve. It can be for education, increasing wealth, emergency funds, travelling, etc. It is challenging to determine financial goals if you have not decided on your life standard after five years or a decade.

Hence it would help if you decided on the goal you want to achieve after the term. Since you will revise your financial objectives throughout your life, you will better understand whether to select a short-term or long-term plan.

Step 2: Categorise Financial Goals As Short-Term, Mid-Term, Or Long-Term

After deciding your financial goal, you have to categorise it within the 'terms’ depending on the time taken. If you choose a short-term goal, achieving it will require lower savings and time. On the contrary, in the case of a long-term goal, you will need to hold more savings and require an extended time to accomplish it.  

Mentioned below are the timelines required for different plans:

• Short-term financial goals range between 6 months and 5 years
• Mid-term financial goals range between 5 years and 10 years
• Long-term financial goals exceed 10 years in the future

Step 3: Fix a Target Date for Goals

Step 4: Arrange Your Financial Goals: Need, Want, and Desire

After choosing the date for your targeted achievement, categorise each goal based on three particulars: need, want, and desire. By doing so, you can decide which one you should give more priority to. For instance, if you want to hoard an emergency fund, it will fall under the ‘need’ category. 

When it comes to increasing your net worth, it is categorised under ‘want’. Lastly, suppose you have a dream to go on a foreign trip. This will be categorised under ‘desire’. Thus, by categorising your goals, you can easily decide where to put the money in case you face a fund shortage.

Step 5: Determine Your Savings Plan Depending on Your Goal

After knowing your goal, its priority, and the time required to achieve it, you can accordingly make future plans, considering your financial situation and any savings you already have. 

For example, suppose you are planning to buy a home in the next five years for which you will need Rs. 6 Lakhs. You must divide that amount by 60 months and save Rs. 60,000 per month. It makes sense to open a recurring deposit account in your bank for three years to save money equally and get some bonus.

As mentioned before, everyone should have some primary monetary goals, irrespective of their associated profession. Here are some significant reasons that should make you set up financial goals in your life:

• A proper financial goal helps you to choose effective strategies regarding money.
• It helps you to create a well-organised action plan to manage your finances.
• Having a financial goal is essential to enhance your motivation and commitment.
• It also allows you to keep track of your progress.
• A sound financial goal enables you to determine your priorities.
• A reasonable financial goal and self-perception help in increasing your chances of getting positive results. 
• It helps in the betterment of your money management sense. 
• With a financial goal, you can expect to experience a better tomorrow. 
• It helps you stay focused and improves your responsibility towards managing finances.
• A sound financial goal will reveal the exact amount you need to save.
• Financial goals help you in shaping your as well as your children’s careers. 

All of the above-stated reasons help shape your life fruitfully and encourage you to make your financial decisions wisely.

The five tips below will help you systematically achieve your goal with a ten-year financial plan: 

• Consider your current financial situation
• Avoid unattainable goals
• Change your plan according to market fluctuations whenever needed
• Be prepared and face the financial challenges when they arise
• Use your budget plan to determine achievability

Now, you can build a robust monetary plan more efficiently after knowing how to form a comprehensive goal with a ten-year financial plan. Remember that your goal achievement and a better future depend entirely on this plan. So make sure to follow your financial plan diligently. In case you face any difficulty, take the help of a certified financial planner to help you in this regard.