By: Tiffany White | Sr. MSR | Mount Brydges
Annual financial planning with your advisor gives you the opportunity to review and update your goals and check-in on your progress to achieving them. It helps you reach your financial goals that you want to achieve – short-term, mid-term and long-term. Let’s breakdown the difference between each type of goal.
Short-Term Financial Goals
Your short-term goals are goals you want to achieve within a year. They should consist of setting a budget, reducing your debt, and starting an emergency fund. There are plenty of free online budgeting tools to help you learn how to budget. Once you figure out a budget, it’s important to start thinking about how you can reduce your debt. If you have an overwhelming debt load, you may want to consider talking to an advisor about consolidating so that you can spend less on interest and pay it down quicker. You could then put that money saved towards some of your mid-term and long-term goals.
Mid-Term Financial Goals
Mid-term goals are what ties your short-term and long-term goals together and are things you want to achieve within 1-5 years. Some mid-term goals may be to finish paying off your student debt, saving for your wedding, saving for your first home, or even doing renovations to your current home. Keeping within your budget and paying off the majority of your debt during your short-term goals, will give you more cash flow to set aside into a savings account to make your mid-term goals a reality. Something that is often overlooked is to plan for the unexpected and ensure you have adequate and appropriate insurance for your needs (such as life and disability insurance). This way, if the unexpected happens, you are covered, which can offer you some peace of mind.
Long-Term Financial Goals
Long-term goals are anything that will take 5 years or longer to achieve. Some examples of long-term goals include: paying off your mortgage, saving for your child’s education, and saving for retirement.
When you have children, you always feel like you have forever to start saving for their education fund; however, in a blink they are eighteen and graduating high school! Setting up a Registered Education Savings Plan (RESP) as a long-term goal will help you prepare for that day, and lessen the burden of adding in the extra schooling expenses all at once.
A popular long-term goal is to be mortgage-free before retiring. Once that financial freedom happens, it allows you to set more money away, allowing you to enjoy your golden years to the fullest.
Lastly, saving for retirement is the most important long-term goal. When you are twenty with your first job, retirement seems so far away, but before you know it, the day is here! Setting up a Registered Retirement Savings Plan (RRSP) at a young age ensures that you’ll have a more comfortable retirement and the financial freedom to enjoy it!
Meeting with your financial advisor and receiving financial advice and coaching to your goals regularly is essential to staying on track and realizing your short-term, mid-term and long-term goals.
If you’re not sure where to begin, we can help. Book a meeting with an advisor today to get started.