Do you have goals? No, well, time to make some! Irrespective of your age or stage, you need to have both short-term and long-term goals. This applies to a student as well, especially for high school students. This can be because after they cross their high school phase, they would enter a whole new world where they would have to be independent. As soon as a student enters the university, the life ahead demands the students to make certain financial decisions, keeping in mind the various goals for life ahead; and it is only imperative that a student must be prepared for all this.
While in high school, your goals may include scoring well in your exams or acing Mathematics; how about financial goals, which would help you exceptionally in years to come?
What are Short Term and Long Term Financial Goals?
When the financial goals are more of immediate expenses, these are known as Short Term Financial Goals. Alternatively, you may incur these expenses within the coming days or months. Short-term financial goals include Emergency funds or travel and events, rent, insurance, and loans. These goals would require immediate funding because your day-to-day utilities and chores depend on it.
On the other hand, long-term financial goals include exchange programs, first apartment or car, appliances supporting hobbies and passion, or even a laptop or mobile.
You should be able to forecast the upcoming need and financial goals to prepare for the same in advance. What makes the difference is that short-term goals can be met easily with simply only a few months of hard work and extensive savings, whereas you need to save for months and years altogether to fulfill a long-term financial goal.
Why Does a High Schooler Need Financial Goals?
Wondering why a high schooler even needs to think about financial goals? You might even question, ‘I’m not even working as of now! There would be time for all this.’
You are right; however, budgeting and vision! That is what you are being encouraged to pursue here. Following are some good answers to this question:
- It is the right age to learn
High school is the age to learn, question, and explore things— especially finance. This is the time where students should learn to master the finances for the future too. When a child is taught well about finances from the right age, it becomes a conscious habit of planning ahead in life, which comes in handy every now and then.
- You will learn a step-by-step approach
Attaining financial goals overnight is merely a fairy tale. One needs to plan and gradually approach the same. However, when you’re older, you won’t have the time or the energy left to grasp the concepts from their very fundamentals. This makes high school the time when you can learn it all gradually but efficiently.
- You will learn about income, expenses, and other financial concepts.
As a school student, you might think that I should be thinking about achieving good grades and involving myself in extracurricular activities; how can setting financial goals positively impact me at the moment? But that’s where you are in the dark, bewildered. When you start planning early, you will gain insights into financial concepts like income, expenses, interests, debts, and repayments by setting financial goals. All of this will come in handy as you grow up.
- Increases your savings and standard of living
Having a financial goal increases the tendency to save, and helps you form a habit of putting aside, and retaining for the future. Thus, you will progress towards a better standard of living with minimum effort. That’s the beauty of financial goals and their knowledge.
- It plans for emergencies and makes you financially mature.
Planning for the future helps you to forecast an emergency and face it. When you keep funds aside for rainy days, you are less hassled when something unforeseen comes up. Hence, setting financial goals will teach you to save up cash and resources for emergencies.
- You will learn financial planning for life goals.
Life goals such as retirement planning, tax-saving, and family financial planning need a lot of perseverance and planning to achieve. Chalking out for these early will help you prep up for life goals. This makes you plan for life goals easily.
Examples Of Short Term Financial Goals
Following are various short term financial goals that you should be ready with funds:
- Emergency Funds
No matter the scenario, you must always have funds dedicated and saved for an emergency. For instance, a financial or a medical emergency would be what you save for! An emergency may arise suddenly, and the bills may pile up to become an overbearing cost.
- Rents, insurances, or loans
Those who live away from their family may need to pay the rent of the room you are staying in. Thus, be prepared for the same. There might be events where you would end up taking loans, the installment for the same might add up to your financial needs; hence, being ready for this becomes imperative.
- Credit card bills
As convenient as credit cards as a medium of payment can be, often paying their bills can be quite a load. You should save funds to pay off the credit card and other related bills. You would also be paying more the longer you stall it.
- Personal needs
Personal and healthcare need like clothes, food, and personal care items are to be addressed more frequently than others, so, you must save up for them individually.
- Buying a Laptop or a Mobile Phone
A laptop – more than a luxury is a need for a high school student. Preparing PowerPoint presentations, doing research, and projects—everything needs a device like a laptop in hand. Buying a laptop might need months of saving up. However, due to the convenience of easy monthly installments, you might get a laptop sooner, but end up paying hefty installments later. These factors must be taken into consideration before setting up financial goals.
- Travelling and events
Do you love to hop around the city? Of course, you do! But, as fun as travel and hanging out with your friends at a movie theatre is, all these have cost too. Financial budgeting can help you plan out better.
Examples Of Long term Financial Goals
The following can be your long term financial goals:
- Summer Foreign exchange program
An exchange program helps introduce new cultures to students and helps them grow. Having an exchange program certificate also looks good on a professional resume; considering this, substantial funds for a foreign exchange program could also be a priority in your list of savings.
- First apartment or car
Are you staying in a rented room? Do you want to buy an apartment? Great! But, real estate can be expensive. The same goes for your dream car. You would have to save for years in advance to get there by 30.
- Fulfilling your passion
Academics and passion may not be the same for everyone. So, if you would someday like to sing a song professionally or you would like to go on a world tour, you should also save up for that.
- Setting up a Side business.
Having multiple sources of income is always awesome. Right from your teenage years, you should think of all you can do in life. Thought about having some passive income can also act in your favor. Generally, these can be multi-step money projects that need investments in various levels; thus, plan for the same by setting long-term financial goals. You may:
- Save enough to start
- Create a business strategy
- Invest in learning how that business works
- Make tweaks and keep going
- Reach out to other investors
- Reach out to partners.
Need For Prioritizing Financial Goals
So, do you prioritize short-term goals or long-term goals?
It is essential to understand that emergency funds are always on top of the list. Therefore, it is better to save up for emergencies first and later look for other saving goals accordingly.
How to Budget for Financial Goals
According to the 50-30-20 principle,
you can divide your income or funds into the following parts:
- Necessities and needs (50%)
- Wants (30%)
- Savings and Debt repayments (20%)
Following this principle gives you enough planning and budgeting options.
S.M.A.R.T Financial Goals
A perfect financial goal can be referred to as a S.M.A.R.T. goal (Specific, Measurable, Achievable, Realistic, and Time-based). Let us know more about them:
Financial goals need to be specific. When you are clear about your goal, you can plan on how to reach them. Narrow down your vision to a specific goal.
Measuring the financial goal to plan and calculate them further can be a smart thing to do. Financial planning is all about money and numbers.
Goals that aren’t stemmed in practicality would not be achieved.
While working for your goal, make sure you have a clear idea of current circumstances to make your goals realistic. Unrealistic goals end up in disappointment and surrender.
Time frame is another important factor for a financial goal. You may need to set a time frame in which the goal needs to be reached. This will take you away from procrastination and keep you accountable.
Financial goals are different for different people; however, the way to fruition them is the same. Lots of budgeting, saving, and judicious thinking: That is the answer! High school is a good phase to start pondering on what you would like to set as your financial goal. You can always go through adult financial suggestions and try implementing them in your lifestyle as per requirement, which will help you get financially independent faster.