When planning your finances and budgeting, it’s all about figuring out your priorities and one way of doing that is organising it based on your objectives for the short, medium, and long term and from there, you align your money to those objectives.
First, I want you to get a piece of paper or you can use your notes app or a word processor if you prefer. Write on the sheet of paper the following five things and then fill out what your objectives are for each of these. For each one, I’ll explain what these mean.
- Super Short term
- Short term
- Medium term
- Long term
- Super Long term
If you’re in a relationship or you’re married, it’s important to do this together with your partner/spouse. You’re a team and finances affect you both equally. Open and honest communication is key in any relationship. You and your significant other may have different goals and it’s important to make sure you’re on the same page or you discuss and compromise. When setting your goals, it’s important for them to be specific, attainable, relevant, and with a specific ‘when’ in mind. If you don’t know what your goals are, how can you set them? If they’re not achievable or relevant to you, it’s easy to give up and think ‘why bother’. Always keep in mind the ‘why’ behind your goals. It’s also good to set yourself a timescale for your goals so you have a deadline that keeps you motivated.
Super Short Term Objectives
Super short term objectives are financial goals for the next three years. Depending on where you are in life, it could be many different things like buying a house, paying off your car, building up your emergency fund, saving up for a new phone or computer, saving up for gifts for the holidays. You’ve got your whole life ahead of you, but some things are more immediate, so that’s super short term. It’s good to look to the future. But it’s also important to look after your current self.
Short Term Objectives
Short term objectives are a bit longer term that super short term objectives and can include things like investing money, saving up for a holiday, saving up for home improvement projects, saving up for a new car, paying off credit card debt, giving to charity, creating a will, getting insurance and income protection plans, and investing in your career by upskilling and taking classes. These goals should be important to you, but not immediate or urgent.
Medium Term Objectives
Medium term objectives are goals that you want to reach in 10-15 years time. It might include things like starting a business, starting a side hustle, doing something that will give you passive income, increasing pension contributions, paying off student loan debt, paying off your mortgage faster by overpaying, saving money for your child to go to university, or getting a promotion at work.
Long Term Objectives
Long term objectives are goals that you want to reach in 25 years. These goals might be related to retirement or your net worth. Some people might have goals of being a millionaire by a certain age. It might be FIRE: financial independence, retire early. When it comes to retirement, it might be putting aside enough money in your pension so you don’t just have a dignified retirement, you have a fun fund for holidays, outings, anything fun you want to do now that you’re retired.
Super Long Term Objectives
Super long term objectives are ones that are way in the future, well into retirement. For this stage in your life you’re going to want to think about who will be taking care of you. Care costs a lot of money so it’s important to consider that to make sure you’re living your best life even in your 80s, 90s, and hopefully your 100s.
If you’re looking for financial planning and financial advice, it’s a good idea to talk to a financial adviser. Thinking about the future can be daunting. You might not know where you’ll be in 10 years or more and that’s okay. Life is ever changing and there’s a lot of uncertainty. An independent financial adviser can help you figure it out. To book your free one hour consultation with Neil, click here.