Main content
Course: Financial Literacy > Unit 4
Lesson 4: Short, medium, and long term goalsShort, medium and long term financial goals
Short-term financial goals are things you want to achieve soon, like saving for a new phone or a fun trip. Medium-term goals might take a few years, like saving for a car or college. Long-term goals are for the far future, like saving for retirement or buying a house. These goals are important because they help you plan your money and make sure you have enough for the things you want and need in life. Created by Sal Khan.
Want to join the conversation?
- Is there a minimum age to have your savings account give you interest? Do all savings account give interest?(5 votes)
- As soon as your money is on deposit at the bank, you begin to earn interest on it.(4 votes)
- are these questions from actual student?(1 vote)
- Usually, but why do you want to know?(1 vote)
- if i get 5000 how much can the max money i can save(1 vote)
- what is the difference between leasing a car vs buying(1 vote)
- What is the difference between leasing a car vs buying?(0 votes)
- Why do you ask about cars in a lesson about short, medium and long term financial goals? That seems fairly random. It's not what the lesson is about at all.(2 votes)
Video transcript
- So it's very likely
that you have different financial goals over
different 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 have
enough money for retirement, to be able to retire at a
certain 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's
say 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 money
in 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 goals
are, "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 important
to have these different lengths of goals, or these
different times of your goals. And the way I think about
it is your long term goals, you shouldn't be changing
them 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 to
retire reasonably well, if you wanna help with
your children's education, you wanna be able to have
enough money for children, or you wanna buy a house. Now they might change
if your circumstances 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 month
you just wanna maintain your new level, your more
frugal level of spending, but maybe you have
another short term goal. Maybe that month you wanna figure out, you wanna be able to
invest your money better. Say, "Look, I have money sitting
there 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 the
month," or maybe you have some other types of saving
goal or spending goal. So it's useful, 'cause if you
just 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 it
down, if you have, say, "I wanna save money for a
down 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, that
would 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 do
you need to bring in, how much money can you spend, and based on that, you could
set your short term goals, and see, "Oh, I'm actually tracking towards that long term goal."