April is Financial Literacy Month – Setting Priorities and Goals

When I started writing these posts about Financial Literacy, it occurred to me that I’ve been teaching it to my friends, family and clients for over 20 years. In fact, in a future post I’m going to share my view on financial literacy courses as mandatory in Kentucky high schools.

In previous April is Financial Literacy Month articles, we discussed the need for Committing to Change, Dealing With Debt, and The Family CFO. This article will deal with Step 10: Set Your Priorities and Step 12: Set Short, Mid, and Long Term Goals.

My previous article, “Making Money” is Not A Financial Goal, I addressed the problems with not having defined financial goals. Making money is not a financial goal. In this step, creating a list of needs and wants will help you determine what’s most important and what your priorities are. If you don’t know what you are saving for, then you can not determine the time frame or the amount to save. 

You also need to prioritize your savings goals. It might be more important to save for retirement than for a child’s college. It might be more important to accumulate a cash reserve than to pay off debt.

Short-term goals are to be accomplished within two years. As I said before, set a date and a specific purpose for the goal. Short term goals should be invested in things that do not fluctuate. You cannot afford to lose money on a short-term goal because there is no time to make up for the losses.

Mid-term goals can be accomplished in two to five years. Typical goals would be establishing a down payment on a house or purchasing a new car. Try to stick with conservative investments such as bank accounts or short-term bonds, or possibly even an equity income fund.

Long-term goals are priorities that will take longer than five years to accomplish. Such as retirement or a young child’s college education. These are the goals that you can take principle risk with and require regular savings.

Have you determined your financial goals?

If not, and would like some help, write me at david@lexwealth.com, or call me at (859) 225-2596.