Video transcript
- So it's very likelythat you have different financial goals overdifferent amounts of time. For example, you likely,or maybe you should, have long term financial goals. Long term financial goals are like, "I wanna make sure I haveenough money for retirement, to be able to retire at acertain standard of living," or, "I want to ensure that my children, or my future children,that I'm going to be able to pay for their college,"or, "I want to save up enough money for a house, or eventually, I wanna pay off that house." Those would all be long term goals, we're talking about many years,probably over many decades. Then you could have medium term goals. You could say, let'ssay over the next year, "I'm hoping to save$10,000," maybe towards a down payment on a house,or maybe to help you purchase a car, or really, just to have some rainy day moneyin case I lose my job, or whatever else might be happening. And then you could go all the way down to your short term goals. Your short term goalsare, "Hey, this month, I want to save 10% of my after-tax money," or maybe "I want to save $500," or "I want to spend 10% less on eating out than I have the month before." Now, it's really importantto have these different lengths of goals, or thesedifferent times of your goals. And the way I think aboutit is your long term goals, you shouldn't be changingthem too frequently, and I think some of the ones that I listed are good long term goals for most people, if you want to be able toretire reasonably well, if you wanna help withyour children's education, you wanna be able to haveenough money for children, or you wanna buy a house. Now they might changeif your circ*mstances change dramatically, if you're able to get a dramatically better job,or you were to lose your job, or if you get married,these all could change your long term goals pretty dramatically, but you're not going to be changing your long term goals on a monthly basis. Now on the other extreme,your short term goals might change pretty frequently,although even there, you should put some thought into it. This month it might be, "Hey, I wanna see if I can spend 10% less on eating out," and then the next monthyou just wanna maintain your new level, your morefrugal level of spending, but maybe you haveanother short term goal. Maybe that month you wanna figure out, you wanna be able toinvest your money better. Say, "Look, I have money sittingthere in a savings account, it's getting, you know, not even at 1%, maybe I wanna figure out if I could get a higher interest rate,I wanna figure that out by the end of themonth," or maybe you have some other types of savinggoal or spending goal. So it's useful, 'cause if youjust had a long term goal, it's really hard to maybe break that down about how that affects you this month. What I encourage you to,definitely have those long term goals, but then break itdown, if you have, say, "I wanna save money for adown payment for a house," let's say you wanna save$50,000 or $100,000, over the next, let's say, 10 years, you can then break that down on how much you need to save per year, thatwould be a medium term goal, and then based on that,you have to think about, "Well, what should your budget look like on a monthly basis?" Well, how much money doyou need to bring in, how much money can you spend, and based on that, you couldset your short term goals, and see, "Oh, I'm actually tracking towards that long term goal."
