We’ve talked about different financial goals before on Everyday Money. But have you ever thought about how it’s easier to meet certain goals rather than others? Why it can feel so hard to save emergency funds for a rainy day, but you don’t have to think twice about putting away money towards your retirement?
That’s because we all relate to money in different ways. We approach our financial goals based on our personal money values. Understanding this knowledge about ourselves can help us reach those goals more efficiently. If you want something to grow and bear fruit that you can enjoy later, you have to plant your seeds and tend to them now, whether it’s easy for you or not. And the best way to have a big, lush financial garden with different types of plants and trees is to give them equal care and attention at the same time. (How are we doing with this garden metaphor so far?)
Let’s talk about how you can do that.
Different Types of Financial Goals
Short-term goals are exactly what they sound like: goals that can be attained in a short amount of time. Maybe you want to spend more money renovating or upgrading your new home in the next few months. Or, you want to save up a little extra money for souvenirs and activities on your upcoming vacation. Or, you want to set aside a specific amount for your family’s emergency fund.
Medium-term goals are similar to short-term goals, but they may not be as dire. You don’t need to reach them right away. Yet they’re not goals so far off in the future that they could be considered long-term. Hoping to buy a house or a new car within the next five years? That’s a medium-term goal.
Long-term goals are (you guessed it) goals that you set for the long-term. Retirement is the most obvious one. Another might be a career goal, where you hope to start a business based on your passion when you’re older, or move up the ranks in your current job. Maybe you want to sell everything you have and travel around the world in your 60s. Whatever they are, you’re always working towards your long-term goals, but they’re not necessarily things you should be checking on every single day.
Finally, ongoing goals are goals that require consistent, regular attention and focus. If you’re buying gourmet coffee every single day and want to kick that habit (don’t we all?) that would be an example of an ongoing goal. Meeting a weekly grocery budget is another. These are goals that don’t have an endpoint. They’re more like lifestyle habits you’re striving towards.
Create a “Gardening” Strategy that Works for You
Now that we’ve recapped the different types of goals out there, it’s time to do a little soul-searching. Be honest with yourself: which goals are easiest for you to reach? What do you prioritize and what do you want to work on?
If you’re kicking butt at your ongoing budgeting goals but could be better at long-term, devise a plan that works for you. Set up automatic payments towards your retirement account. You’re caring for your retirement “tree” without even thinking about it. This helps if you tend to dwell on money as soon as it comes in, how you can apply it towards your short-term or ongoing goals.
Struggling to figure out how to save for medium-term goals, like a down payment for a house or car? Medium-term goals can be especially tricky because it’s not always obvious that they’re medium-term goals. These goals can be deceptive. But guess what? Everyone’s goals will be sorted a little differently. Someone who is already househunting may have their down payment set as a short-term goal. Compare that to someone else who just signed an apartment lease for a couple of years. They’d probably set a new home as a medium-term goal.
Once you’ve straightened out your goals, try to find a way to tend to all of them at the same time. You can set up simultaneous automatic payments for your retirement account and checking accounts, and at the same time, pull cash or set aside amounts for your weekly budget. Make it as easy as possible to tend to all of your goals at once.
Remember Your Values
When you ignore your priorities and your spending habits, you end up making money decisions that don’t really work for you. To continue our gardening metaphor, that would be like trying to grow herbs and vegetables that you know you won’t eat or use in your cooking. You know you prefer fruit and you’ll use them for baking, so why not plant more of those seeds instead?
Understanding and accepting your money habits will help you figure out your financial gardening strategy. Being mindful of your money values will guide you towards making the best financial decisions for you.