Should I create financial goals for the next 1-3 years?
Absolutely, setting financial goals for the next 1-3 years is a smart move, especially if you're transitioning from a corporate job to freelancing or pursuing passive income streams. Financial goals act as your roadmap during this new journey. They bring clarity, focus, and direction to what can sometimes feel like a sea of uncertainty.
Here’s how you might approach it:
- Define Clear Objectives:
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Decide what you want your finances to look like. Are you planning to build up savings, reduce debt, or achieve a steady stream of passive income? Get specific with numbers and timelines.
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Short-Term vs. Long-Term:
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Break your goals into short-term (1 year) and long-term (up to 3 years). In the first year, focus on immediate needs like building an emergency fund or covering costs as you transition. Long-term goals might include investing in learning or reaching a passive income target.
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Actionable Milestones:
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Break down each goal into actionable steps. For example, if your goal is to save $10,000 in a year, you might aim to save around $834 each month. Consider using automated savings to make it easier.
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Capture, Develop, Expose:
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Use this framework if it helps to keep your goals dynamic. Capture your current financial situation and opportunities. Develop a plan that incorporates new skills or income streams. Expose yourself to new experiences that can add value, like networking or workshops.
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Review and Adapt:
- Regularly review your progress. Life can be unpredictable, especially while adjusting to a new work style. Be ready to pivot your goals as needed. Reflect on what’s working and what’s not.
Personal Anecdote:
When I first made the leap from engineering to freelancing, my initial financial goal was simply to replace my previous salary. I quickly realized this wasn’t just about making ends meet but also about building a sustainable lifestyle. I shifted my focus to creating diverse income streams and gradually increased my passive income through writing and online courses.
Remember, financial goals are not set in stone; they evolve with your journey. It’s about finding a rhythm that works for you and redefining what success means along the way. Take it one step at a time and make sure your financial plan aligns with your overall life goals and values.