Setting and Achieve Personal Financial Goals

Why do so many people have money problems? The main reason is that they do not plan how they will use their money. You can avoid money problems by setting and achieve some clear personal financial goals in mind.

Two factors will influence your planning for financial goals. The first factor is the time frame in which you would like to achieve your goals. The second factor is the type of financial need that inspires your goals.

Time Frame of Personal Financial Goals

Goals can be defined by the time it takes to achieve them:

• Short-term goals take one year or less to achieve (such as saving to buy a computer).
• Intermediate goals take two to five years to achieve (such as saving for a down payment on a house).
• Long-term goals take more than five years to achieve (such as planning for retirement).

Start with short-term goals that may lead to long-term ones. Some goals, such as having money for the holidays or other special occasions, occur every year. Other goals, such as buying a car, may come up only occasionally. What are some of your short-term, intermediate, and long-term financial goals?

Personal Financial Goals for Different Needs

The need to have your hair cut at a salon is different from the need to buy a new car. A haircut is a service, or a task that a person or a machine performs for you. A new car is a good, or a physical item that is produced and can be weighed or measured. You might buy a soda every day. You might buy a new car every five or six years. How you establish and reach your financial goals will depend on whether a goal involves the need for consumable goods (such as a soda), durable goods (such as a car), or intangible items (such as an education):

• Consumable goods are purchases that you make often and use up quickly. Food and products, such as shampoo and conditioner, are in this category. Although the cost of such items may not equal the cost of a car, the costs of consumable goods add up.

• Durable goods are expensive items that you do not purchase often. Most durable goods, such as cars and large appliances, will last three years or more when used on a regular basis.

• Intangible items cannot be touched but are often important to your well-being and happiness. Examples of intangibles include your personal relationships, health, education, and free time. Intangibles are often overlooked but can be expensive.