Planning to align your short-term and long-term plans and want to know the best way to do so? Well, this blog will answer your queries and explain how to go about it systematically.
Individuals often have a list of financial goals that will secure their financial future. Both, short-term and long-term goals are equally important and serve different purposes in real life.
In most cases, you cannot achieve one without the other. Hence, it becomes feasible to align them as short-term goals depend, to a great extent, on long-term strategy.
What are short-term goals?
Short-term goals are the goals that have to be met in the immediate future and cannot be avoided. For instance, you might be interested in creating and managing an emergency fund or have to make regular payments towards an insurance scheme that you have taken out or simply your credit card payments.
Short-term goals are actionable steps that improve productivity and help to remain focused.
What are long-term Goals?
The long-term goals are the financial goals for the future or down the line in the next 10 or 15+ years. These often include a child’s education corpus, retirement fund, or mortgage payments, as these will be needed after several years and not just now.
Long-term goals give direction and help to develop plans and steps that will take an individual toward his dream.
Steps for aligning short-term and long-term plans
1. Look into the financial goals
Look at your financial goals and divide them into two different categories short-term and long-term. Be aware of your goals to know where you have to spend your money.
Are you creating an emergency fund paying rent, or making home improvements? These are short-term financial goals, but if you want to maintain a retirement fund or an education fund for your child, then these will be treated as long-term goals.
2. Prioritize your goals
Identifying the various goals is the easy part but prioritizing them is a very different scenario. Every goal looks important at the onset hence you need to sit down and think carefully about the ones with the maximum impact.
3. Be realistic
People need to be realistic about their expectations because you need to have the means to fulfill your wishes. Look at the amount left after meeting your expenses and decide how to manage it constructively.
You can take the help of the 50/30/20 equation or adjust it according to your personal needs. Realistic and clear goals will enable the alignment process and lead to success.
4. Set long-term goals before the short-term tactics
There is a misconception that you have to set up short-term goals first because they are related to the present and need to be addressed first.
The truth is that aligning both sets of goals requires you to set clear and defined goals for the future at first.
When you know the direction, you need to take it becomes easier to break the long-term goals into specific and measurable short-term tactics, follow a definite timeframe, and uphold the long-term vision.
5. Break the long-term goals into shorter goals
Aligning and solidifying the short-term and long-term plans will have a positive impact on future objectives, and one of the best ways is by breaking the long-term goals into small defined goals that can be achieved within a specific and small timeframe.
Make sure the long-term goals are identifiable and concrete because vague goals will make the alignment process difficult.
6. Specific goals
When the goals are specific, it becomes easy to create and follow a definite plan of alignment. For example, if a person has INR 4000 left for savings and investment and he has to pay INR 1000 every month towards his retirement plan, then his path is clear.
It becomes vital to keep up with your rising income. If at the start of your professional career, you were saving and investing only a small amount because of a small salary, then you should increase your savings as your salary increases.
7. Take the help of financial experts
Sometimes it is better to opt for expert advice and work accordingly. Financial counselors at Edufund can create a financial plan that will align your short-term and long-term goals perfectly. This will make the journey comparatively easy.
Conclusion
It is important for short-term planning to align with long-term goals and not the other way around. When an individual has a specific long-term plan that is concrete and identifiable, then it becomes easy to mold the short-term tactics and uphold the longer visions.
