Types of Financial Goals for a Youth in Kenya

When you are creating your financial goals, it is wise not to be ambiguous but instead group them into categories. Widely, there are three types of financial goals; short-term financial goals, mid-term financial goals and long-term financial goals.

As the terms suggest, short-term financial goals will take a short period of time and less money to be achieved. The timeline for a short-term financial goal is usually 12 months or less. On the other hand, midterm financial goals are goals that can be accomplished in less than 5 years but cannot be accomplished in less than a year. Therefore, in most cases, mid-term financial goals will take an estimate of 1-5 years.

Short-Term Financial Goals

Short-term financial goals are typically those that can be achieved within a year or less. These goals often require less financial commitment and can usually be accomplished with careful budgeting and planning. For youths in Kenya, setting short-term financial goals can provide a sense of achievement and help build a foundation for more significant financial aspirations.

Examples of Short-Term Financial Goals:

1. Saving for a New Gadget: Whether it's a smartphone, a laptop, or a gaming console, saving for a new gadget can be a motivating short-term goal. Setting aside a specific amount each month can help you reach this goal within a few months.
2. Building an Emergency Fund: Creating an emergency fund to cover unexpected expenses, such as medical bills or car repairs, is an essential short-term goal. Aiming to save at least one month’s worth of expenses can provide a safety net in case of emergencies.
3. Paying Off Small Debts: If you have small debts, such as a credit card balance or a short-term loan, setting a goal to pay these off within the year can help improve your financial situation and reduce financial stress.
4. Starting a Small Investment: Investing in low-risk options, such as a high-yield savings account or a unit trust, can be a great short-term goal. This can help you get familiar with investing while building a small amount of wealth.

Also Read: The Importance of Having Financial Goals as a Youth in Kenya

Mid-Term Financial Goals

Mid-term financial goals are those that take between one to five years to achieve. These goals usually require a more substantial financial commitment and careful planning. They often involve larger purchases or investments that can significantly impact your financial future.

Examples of Mid-Term Financial Goals:

1. Buying a Car: If you’re planning to purchase a car, setting a mid-term goal to save for a down payment or the entire cost of the vehicle can be a practical approach. This might involve setting aside a specific amount each month to reach your target within a few years.
2. Saving for Higher Education: If you plan to pursue further education, such as a university degree or a vocational course, saving for tuition fees and related expenses is a crucial mid-term goal. This requires consistent saving and possibly exploring scholarships or financial aid.
3. Building a Substantial Investment Portfolio: Growing your investment portfolio with assets such as stocks, bonds, or real estate can be a mid-term goal. This involves researching investment opportunities and consistently investing over a few years.
4. Starting a Small Business: If you have an entrepreneurial spirit, saving for the initial capital to start a small business can be a rewarding mid-term goal. This involves budgeting for business expenses, such as equipment, inventory, and marketing.

Long-Term Financial Goals

Long-term financial goals are those that typically take more than five years to achieve. These goals often require a significant financial commitment and long-term planning. They are usually related to major life milestones and financial independence.

Examples of Long-Term Financial Goals:

1. Buying a Home: Purchasing your own home is a significant long-term goal. This involves saving for a substantial down payment, securing a mortgage, and budgeting for ongoing homeownership costs. It requires careful planning and a long-term commitment to saving.
2. Planning for Retirement: Although retirement might seem far off, starting early to save for retirement is crucial. Contributing to retirement savings accounts, such as a pension or retirement fund, ensures you have a secure financial future when you eventually retire.
3. Funding a Major Life Event: Whether it’s funding your children’s education, planning a dream vacation, or preparing for a major life event, setting long-term financial goals helps you save and invest to achieve these significant milestones.
4. Building Generational Wealth: Creating a legacy for future generations involves planning and investing wisely over the long term. This can include investing in real estate, stocks, or businesses, and ensuring that your financial assets are managed effectively to benefit your family in the future.

Conclusion

Setting financial goals is a fundamental step in achieving financial stability and success. By categorizing your goals into short-term, mid-term, and long-term, you can create a structured plan to manage your finances effectively. For youths in Kenya, having a clear understanding of these different types of goals can help in making informed financial decisions and working towards a secure and prosperous future.

Remember, the key to achieving your financial goals is consistency and discipline. By regularly reviewing and adjusting your goals as needed, you can stay on track and make steady progress towards your financial aspirations.