Break It Down
At first, what you may have are long-term goals (goals you expect to meet in five years or more). You can break these goals down into short-term goals (one year or less), making it easier to stay focused on the future and giving you a sense of accomplishment and satisfaction along the way. In some cases, you may also want to identify a medium-term goal (one to three years).
Remember to make the goals specific. Ask yourself how you'll know when you've reached each of your goals. If you can come up with a concrete, measurable answer, you're on the right track.
After you've written down as many goals as you can think of, choose two or three short-term and two or three long-term goals to work on this year. Let's say you choose building a retirement fund as one of your most important long-term goals. To break it down into short-term goals, set a monthly goal to contribute a set dollar amount to your employer's 401(k) or other retirement plan.
Make goals specific. Instead of saying “I want to save for retirement,” say “I want to contribute $100 monthly to my 401(k).” Instead of saying “I want to have less debt,” say “I want to pay $100 extra a month toward my credit card with the highest interest rate.”
Most people struggle with the question of whether to use available funds to pay off long-term debt, such as paying down the balance on a mortgage, or to use them for short-term goals, such as building an emergency fund. The answer is to find a balance between the two. This takes thoughtful consideration of your short- and long-term goals, careful planning, and making adjustments in your plans as your goals and your financial situation change.
