Identifying and grouping your financial goals to handle your money well is essential. Two big things decide these goals: when you want them to happen and what you need them for. In this blog, we will discuss types of financial goals by categorising them into two groups for enhanced clarity.
Two main things usually shape your money dreams for the future. The first is when you want to reach your goals. The second is the kind of money that pushes your goals. While working on your financial plan, knowing these factors can help you set goals more effectively and see a more straightforward route to your desired money future.
Types of Financial Goals – Based on Timing of Goals:
Regarding personal financial goals, timing is crucial in determining their nature and significance. Based on the timing, we can break down goals into three categories:
1. Short-Term Goals:
Short-term goals include those objectives that you aim to achieve within a relatively brief span, often within a year or less. These short-term aims bring accomplishment and set the base for intermediate and long-term goals.
Examples include building an emergency fund, saving for a vacation, or paying off smaller debts.
2. Intermediate Goals:
Intermediate goals extend beyond the short-term horizon, typically one to five years. Achieving these goals needs more planning and self-regulation, and it’s how your financial growth happens.
Examples include saving for a down payment on a home, funding a higher education degree, or launching a small business.
3. Long-Term Goals:
Long-term goals encompass the broadest time frame, usually extending beyond five years. Long-term goals require consistent effort and a planned method to keep you on course to realise them.
Examples include retirement planning, purchasing a home, or substantial wealth growth.
Types of Financial Goals – Based on Goals for Different Financial Needs:
Another crucial aspect that influences your financial goals is the type of financial need they meet. Let’s explore this aspect through three distinct categories:
1. Consumable-Product Goals:
Goals related to things you can use to bring quick joy and contribute to your overall well-being. These goals are centred on things or experiences usually used up or enjoyed quickly.
Examples include purchasing a new gadget, enjoying a dinner at a luxurious restaurant, or taking a weekend getaway.
2. Durable-Product Goals:
Durable-product goals involve acquiring items that provide utility over a more extended period. These goals will make you happy immediately and help you later.
Examples include getting a car, improving household appliances, or acquiring quality furniture.
3. Intangible-Purchase Goals:
Intangible-purchase goals focus on experiences or achievements that don’t necessarily involve physical possessions. Intangible-purchase goals enrich your growth and contribute to your overall sense of fulfilment.
Examples include pursuing higher education, attending a professional development program, or starting a philanthropic endeavour.
Final Words
To wrap it up, making personal financial goals involves deciding when you want to reach them and the particular money needs they are made for. When you split your financial goals using these factors, you can make a clear and tailor-made plan for your finances. Whether saving for a dream trip, planning for a cosy retirement, getting valuable things, or growing personally, knowing these financial goal types can lead you to a better and wealthier future.