Identifying Your Short, Medium, Long-Term Goals

The first step in financial planning is to identify your goals.You have to estimate how much money you'll need to meet each of your goals, and use an online calculator to determine how much you need to save each month to reach that goal within your time frame.

Your short-term goals should take less than 5 years to achieve might include a wedding, going on a vacation,owning a new car,etc.Next, think about medium-term goals, such as owning your very first home and financing your kids' educations.Last but not least, list your long-term goals, such as travel and retirement.

How to Determine How Much You Need to Retire???

The most commonly asked retirement question is "How much money do I need to retire?". Although a little simplified, the fastest way to get an estimate is to multiply your first year of retirement needs by 25. In effect, this assumes that you are withdrawing 4% of your total retirement savings per year. For example, if you are planning to retire in 5 years and expect to need $40,000 per year, you would want to have about a million dollars in your retirement account.

Don't forget to factor in other sources of income. Subtract the amount of social security income and pension income from your annual needs. Also, if you are planning for a retirement that is more than a few years away, make sure you account for inflation by adjusting your annual needs upward.

Some other important things to remember are that health care expenses are increasing faster than income and savings rates. Also, don't forget about any children or parents that you may have to provide for, whether it's education, housing or elder care. And remember, you may need a home too someday that could cost more per month than your current living expenses. It's always best to aim for closer to 50 times your first year's retirement needs.

Achieving your financial goals means making a realistic plan to get there and sticking to it.When you had reached your goal and owning your dream home or taking a great vacation, you will be so happy and glad that you took time to set your goals and make a plan to achieve them.

In conclusion,no matter what your goal, planning for your retirement is one of the most important things you can do to make sure that your dreams come true.