Personal Finance Assignment: Short, Intermediate, and Long-Term Goals

Financial planning via the establishment of financial goals is a significant strategy for individuals taking control of their financial lives. Goals setting based on short-term plans, intermediate-term plans, and long-term plans is key in helping an individual become financially secure and independent (Greco & Kraimer, 2020). The financial plan needs to be specific and realistic. The paper considers a yearly salary average amounting to $33,400.

Short Term Goals

Short-term planning is based on setting goals that need to be accomplished within the next 12 months or less. Short-term goals can be scheduled daily, weekly, monthly, quarterly, or yearly (Creed et al., 2021). Short-term goals are considered the building blocks for intermediate and long-term goals. Establishing a budget and a plan to eliminate debt are considered short-term goals. Additionally, the creation and establishment of an emergency fund targeting 6 months of basic living expenses is a key short-term goal that every employee needs to adopt. The emergency fund amounts to $2500 for six months. Therefore, the monthly expenses equal the total emergency fund divided by six months, amounting to about $416.67 (Bankrate, 2023). The following bullet points represent the short term goals.

• Establishment of budget and elimination of debt. This goal aims to establish a budget aiming for zero debt within the next three months
• Establishing an emergency month amounting to $2500 in the next six months. $416.67 will be saved every month for the next six months.
• Establishment of savings for retirement investment in real estate. The goal is to save $500 every month until retirement.

Intermediate Goals

Intermediate goals help employees focus their financial planning on ensuring their short-term goals stay on track. Intermediate goals entail strategies to help short-term objectives stay on course. The accomplishment of intermediate goals helps in setting the course to accomplish long-term goals. Intermediate goals regarding personal financial planning are associated with activities such as education advancement, establishment of a family, and investment in a home (Sung et al., 2013). The following bullet points represent the intermediate term goals.

• Education advancement and skill development. Establishment of saving funds to help with education and skills advancement. The goal is to save $50000 within the next 10 years.
• Establishment of a family. The goal is to develop family planning within three to five years. A budget amounting to $500 will be created to cater to the family’s monthly expenses.
• Home investment. The goal is to establish a home within 5 to 7 years after a salary increase. A budget of $1000 monthly will be created to help gather the funds.

Long Term Goals

Long-term goals help an individual focus the objectives on resolving financial problems after retirement or during old age. Planning for retirement is considered a long-term goal. Long-term goals aim to ensure there is financial security after retirement. Therefore, investments in businesses such as real estate will be essential to ensure there is revenue after retirement. The following bullet points represent the long term goals.

• Retirement planning. The goal is to achieve savings amounting to $210000. The funds will be acquired from the $500 monthly contributions for the next 35 years.
• Real Estate Investment. The goal is to use the $210000 retirement savings to buy or construct a residential apartment. The asset will be acquired within 35 years
• Establishment of a business. The goal is to establish a business selling laptops upon retirement. The budget will amount to $100000 to be acquired within 10 to 35 years.

Conclusion

Short-term goals serve as foundational building blocks, aiding in the achievement of intermediate goals, which in turn pave the way for the realization of long-term financial objectives. Setting specific and realistic financial goals helps in establishing personal financial security. Effective planning based on short-term, intermediate plan, and long-term goals can help an individual develop a prosperous and secure financial future.

References

Bankrate. 2023.Emergency fund amount: How much should you have in emergency savings? Available at: https://www.bankrate.com/banking/savings/how-much-in-your-emergency-fund/

Creed, P. A., Sawitri, D. R., Hood, M., & Hu, S. (2021). Career goal setting and goal pursuit in young adults: The role of financial distress. Journal of Career Development, 48(6), 801-816.

Greco, L. M., & Kraimer, M. L. (2020). Goal-setting in the career management process: An identity theory perspective. Journal of Applied Psychology, 105(1), 40.

Sung, Y., Turner, S. L., & Kaewchinda, M. (2013). Career development skills, outcomes, and hope among college students. Journal of career Development, 40(2), 127-145.