How to iron yours for 2022

I once gave a presentation to a group of (unfortunately, disgruntled) employees on goal setting and got some feedback on the topic (not about my presentation skills, although they probably meant both):

How to iron yours for 2022 41 hero image marketbeat 403379 Contributor – MarketBeat

  • “Setting goals is boring.”
  • “I like to live in the moment.”
  • “Abuuuuu.” (Yes, there were several overlapping comments.)

the American Association of Revealed Psychology that in 2021, money constituted high and “somewhat significant” stress levels for 61% of Americans. So why not implement personal financial goals? If planning for the future can help ease financial stress, why not fix it by setting three types of personal financial goals?

Let’s break down short-, mid-, and long-term financial goals so you can achieve exactly what you want, whether you’re looking to start investing in cryptocurrencies or putting together a budget for the first time.

Three Types of Personal Finance Goals

The Financial Industry Regulatory Authority (FINRA) has already made it a little easier for you by identifying three types of financial goals:

  • Long-term financial goals: Long-term financial goals generally take more than 10 years to achieve and can be about saving for retirement or paying off your mortgage.
  • Medium-term financial goals: Medium-term financial goals typically take three to 10 years to achieve and can include saving for a down payment on a home or saving money to start a business. Medium-term goals may also involve the costs of saving for college (depending on the age of your children).
  • Short term financial goals: Short-term financial goals should take less than three years to achieve and may include saving money to renovate a basement or saving for a vacation.

Setting very clear time frames on all the goals you want to achieve will help you identify concrete steps to get there. But how do you do it? Let’s find out.

How to set financial goals in 2022

Let’s take a look at each type of financial goal one at a time so there’s no question about when you want to reach a goal and how to do it.

How to set long-term financial goals

Setting long-term financial goals doesn’t have to be daunting, though it may feel like you’ve been given the monumental task of mapping out your entire life on paper. Here’s the deal though: if you think about it that way, you’ll always feel overwhelmed!

  • Step 1: Start by writing down exactly what you want to accomplish beyond the next 10 years. You may want to retire in Florida, save $2 million, sell your house, etc. Think carefully about what you want.
  • Step 2: Write what it takes to get there. If you have no idea, do some research on what you need to do to make this happen. If you need help getting your long-term financial goals off the ground, hire a financial advisor to help you reach them.
  • Step 3: Gather the right types of assets to get you there. For example, if you need a stock-heavy IRA to make your $2 million dream come true, put it together.
  • Stage 4: Put your plan in motion, automate your investments so that you automatically contribute money each month, and monitor it over time.

Can’t think of everything you want to do beyond 10 years? It’s fine. If you start saving for retirement, you can always add goals to your list later.

How to set medium-term financial goals

Setting medium-term financial goals can seem a bit more confusing. After all, it can be difficult to determine exactly what you might want three to 10 years from now. You may want most of the “stuff” before that!

  • Step 1: Consider the goals you may have three to 10 years from now and write down as many as you can think of. Maybe you want to pay off debt or earn more money. Perhaps you have some upcoming milestones in your life, for example, an upcoming big birthday or anniversary.
  • Step 2: Identify medium-term investment options that could get you where you want to be. You may want to put them into less risky investment options so you can benefit from them when you need them. Many people will continue to put medium-term investments in well-placed stocks (but will diversify), certificates of deposit (CDs), corporate bonds and other types of accounts. You can also choose methods that can help you, not investments at all. For example, you can choose the debt snowball method of getting rid of credit card debt (where you pay off credit cards with the highest interest rate first).
  • Step 3: Automate your investments and monitor them to see how well they’re performing.

How to set short-term financial goals

Short-term financial goals are obviously the goals you’ll set so that you can access the money fairly soon. You want to be able to access the money within three years. Here is how to do it:

  • Step 1: Write down all the short-term financial goals you want to achieve (even if they don’t require you to open an investment account). For example, you may want to create a budget, create an estate plan, add to your retirement accounts, or earn more money. You can also write goals that do require you to start a fund, such as creating an emergency fund.
  • Step 2: Find out how you will make all those short-term goals a reality. Make your plans as clear as possible. For example, you might say you want to build your emergency fund by putting 5% of your money into a money market account. Or maybe you start looking for a side job that will go directly into your investment account or ask your boss for a raise.
  • Step 3: This step always involves the follow-up process! Implement your plan and follow it through to completion.

Put your financial goals in motion in 2022

Goal setting doesn’t have to be exhausting. Spend just an hour thinking through your goals and do some research before the new year. If you have a spouse, partner, or family members who want to participate in your brainstorming session, let them. It can be a really productive way to plan for 2022 and beyond.