Learn the secrets of managing your money by setting short, medium, and long-term financial goals. Achieving your dreams and securing your future becomes simple with this step-by-step guide to smart money planning and goal-setting.
Financial goals and planning: short, medium, and long term
You have learned how to set SMART goals for your money, but how do you plan for different types of goals? Depending on your needs and wants, you may have short, medium, and long term financial goals. These goals have different time horizons and risk levels, and require different strategies to achieve them.
Short, medium, and long term financial goals
Short term financial goals are goals you want to achieve in less than a year, such as buying a new phone, saving for a trip, or paying off a small amount of debt. These goals are usually low risk, meaning you are unlikely to lose money or face unexpected costs. To reach these goals, you need to budget your income and expenses, and save a portion of your money in a safe and accessible place, such as a bank account or a money jar.
Medium term financial goals are the ones you want to achieve in one to five years, such as buying a car, saving for college, or starting a business. These goals are usually moderate risk, meaning you may face some uncertainty or fluctuations in your income, expenses, or returns. To reach these goals, you need to plan your income and expenses, and invest a portion of your money in a diversified and flexible way, such as a mutual fund or a certificate of deposit.
Long term financial goals are the ones you want to achieve in more than five years, such as buying a house, saving for retirement, or leaving a legacy. These goals are usually high risk, meaning you may face significant changes or challenges in your income, expenses, or returns. To reach these goals, you need to project your income and expenses, and invest a portion of your money in a growth-oriented and long-lasting way, such as a stock or a bond.
Goal Type
Time Frame
Example
Risk Level
Strategy
Short term
Less than a year
Buying a new phone, saving for a trip, paying off a small debt
Low
Budget and save in a bank account or a money jar
Medium term
One to five years
Buying a car, saving for college, starting a business
Moderate
Plan and invest in a mutual fund or a certificate of deposit
Long term
More than five years
Buying a house, saving for retirement, leaving a legacy
High
Project and invest in a stock or a bond
Check your understanding
What type of goal?
You want to save money for your mom's birthday gift.
Identify the goal as a short, medium, or long term goal.
Short-term goals are usually those that take less than a year to achieve, while medium-term goals take between one and 10 years. Long-term goals may take more than a decade to achieve. You can use them to evaluate the success of your short-term goals and see how far you are from your long-term ones.
“My short-term goals are fairly simple. I want to adapt to the new work environment as quickly as I can to perform better. My long-term goals are to pursue opportunities that help me grow. Progress is the key.
However, a general rule for long-term goals could be anything that typically takes you five years or longer to accomplish. Some examples of long-term financial goals may include: Saving for a down payment on a house. Funding your retirement. Paying off large debts (e.g., credit cards, student loans, mortgage, etc.)
Medium-term goals are goals you can achieve in one to five years and build toward your life vision. In general, you should have between three and seven medium-term goals within each area of your life, including your career, life skills, personal finances, education, and fitness.
Short-term goals can be achieved in fewer than two months.Medium-term goals may take from two months to three years to achieve.Long-term goals require three or more years to achieve. Long-term goals may be built upon short-term goals.
Long-term goals are usually completed in 3 to 5 years, or longer. This is not a set practice, simply a common guideline that makes sense when laying out your plans. Many people plan even longer milestones spanning 10, 20, or even 50 years.
How long are short- medium- and long term? There are no exact definitions, but short-term usually means a period shorter than two years, medium-term covers a range from 2 to 5 or 10 years and long-term is a period longer than 5 or 10 years.
A MTFS acts as a framework or set of guiding principles within which an organisation will take financial decisions, will plan and manage budgets, and will use its financial resources to support delivery of strategic priorities.
For example, a short-term goal might be to pay off debt or build a six-month emergency fund. While your medium-term goals will be to buy or remodel a home, plan a wedding or fund your 12-year-olds college expenses. The long-term goal usually revolves around retirement, travel or buying a vacation home.
Short Term: Usually set from periods of one day to one month. Medium Term Goals: Set between one month and to six months, one month and three month goals are the most common. Long Term Goals: Range between six months to several years.
How long are short- medium- and long term? There are no exact definitions, but short-term usually means a period shorter than two years, medium-term covers a range from 2 to 5 or 10 years and long-term is a period longer than 5 or 10 years.
Introduction: My name is Aracelis Kilback, I am a nice, gentle, agreeable, joyous, attractive, combative, gifted person who loves writing and wants to share my knowledge and understanding with you.
We notice you're using an ad blocker
Without advertising income, we can't keep making this site awesome for you.
