The importance of financial planning

Short-term and long-term financial goals are the focal point when financial planning is mentioned.

09:09 18 November 2013

Financial planning is the key to success in everything one does. No matter what your goals are, you need to carefully draft them out on a paper highlighting all you set to achieve in order of their preferences.

How do you know your preferences?

Financial priorities vary according to individuals so it all depends on whatever you want it to be. For some people, insurance of their homes, cars and other valuable properties are what they see as the first on their priority list. This is a good idea as you never can tell what unforeseen circumstance may befall you in the future so if you are one of those that set the first goal on your preference list to vacations and other forms of extravagant spending, it is advisable that you think again about a choice previously made.

Short-term goals

After sorting out the issue of insurance, you can now decide on whether you want a short term or a long term goal. Establishing financial goals for a short term usually involves planning for something that can be achieved in a short term such as saving for a car, wedding, deposit for a new home, and others. Short-term financial goals are usually within the range of five years and you should always bear in mind the plan you choose to take in order to successfully achieve these goals. Paying off mortgages on time, saving for a down payment to purchase a home are few examples.

Long-term goals

Long-term financial goals generally include saving for the purchase of a vacation home, money for children’s education and development, and the most important for advancing people which is saving for a comfortable life after retirement. In order to achieve these long-term financial goals, you have to start planning early and this is not to suggest that you put your short-term financial goals at risk, but you should be able to find a way to blend both together.