5 Years Financial Goals for Employees and Salary Earners: How to Set and Achieve Them

Money play a very vital role for one to live a standard life, feel comfortable and provide oneself with basic needs. Attaining a good financial status is also a very important goal everyone, including salary earners, should pursue as constant lack of money can lead to a miserable life. As a business owner, you need capital and financial profits to take your business to the next level, however, for employees and salary earners , the case is different. Most employees have a fixed amount of average weekly, monthly or annual salary and managing such amount of fixed income can be tough. Without sufficient income, you may never accomplish much with your salary without setting financial goals.

Financial Goal-setting: Meaning, types and Importance for Employees and Salary Earners

A financial goal is simply a targeted financial status one wants to attain in a set period of time. Financial goal can also mean a set amount of money one wants to save, invest, spend or exchange in a set period of time. The term "financial goal" has been used interchangeable with the word "budget", however, they are a bit different. 

While budget helps you to project your key expenses and savings for the week, month or year, financial goal is a targeted project of longer period, say 5 years, towards a certain course, most especially to improve ones finance. A budget is there to keep tract of projected expenses based on what is already on ground while financial goal aims to acquire a different level of finance which is not necessarily about expenditure.

How to Set Financial Goals Using SMART Goal-setting Framework

A lot of financial experts have drawn several strategies to achieving financial goals. Some of these strategies are not different from the usual goal-setting techniques in most cases. Goal-setting frameworks like SMART can also help one set attainable personal financial goals. SMART is an acronym from Specific, Measurable, Achievable, Realistic and Timely. SMART framework in financial management entails a financial goal-setting strategy which is not only achievable but specific, realistic, time-bound and can be measured based with quantifiable outcome.

It is easy to make plans and set financial goals as a salary learner but very hard to stick to the timing of such goals. While setting financial goals, try to stick to the elements of the SMART goal framework. This means that you must think about your current status, total income, your expenditure, your current project, plans and existing responsibilities. Ensure that you do not set vain goals but those that are attainable within the expected period to make it realistic. In addition, you need to know the basics of time management as timing is one of the important aspects of goal-settings because one key factor in SMART goal-setting is timing, meaning that your goal does not only need to be specific and realistic but time-bound. After you consider these factors, you can begin your goal-setting process.

Types of Goal-settings: Why 5 Years Goal is Best for Employees and Salary Earners

There are different types of financial goals including short-term, intermediate (middle-term) and long-term goals. While 5 years financial plan is an intermediate goal-setting, it is good to note that it is more visible and realistic over goals set for the next 7-10 years time. Intermediate financial goal-setting is very important for employees and salary earners because most jobs are not predictable. You can be promoted at work place within the set period, but you can as well lose the job. Therefore, as a salary earner, setting financial goals in a period of five years or less is the best thing to do.

5 Years Financial Goal Examples for Employees and Salary Earners

Below are example of goals you can set as an employee and salary earner for the next five years. These goals are realistic and have elements of specificity. They also consider timing which is a period of five years. You can think about these goal examples and streamline the subset of each of these goals as it suits your total periodic income.

1. Having alternative source of income

There is nothing as bad as having just a single source of income as an employee. While it may not be a big deal for business owners, it is a great risk for salary earners, especially those working for private organizations. you can just go to office tomorrow and receive a sack letter when you do not even expect it. Even government employees or civil servants face a similar fate, sometimes. Theirs may not be a job termination letter, but in most developing countries, government can owe workers for several months. Setting up a medium term personal financial goal plan to have an alternative source of income should be a necessary step. Write down how you want to do it and what income or business idea fits your desire.

Below are examples of alternative source of income for employees and salary earners to attain financial goals:

• Learn a skill to get independent skill-based jobs in the next 5 years.
• Make money from home by becoming a freelancer.
• Multi-task while: While still working, you can be offering personal services
• Monetize your hobbies.
• Search for remote job opportunities and choose which is best for you.

2. Freedom from debt

Debt is a very heavy burden to bear, especially if you are an employee whose salary is not tangible enough to clear existing debts. While some debt may be due to investment that bring better profits, borrowing for a profitless purpose is a very bad habit. The main problem with loan debt is that it seems to be addictive. Once you begin to borrow money and spending above your salary, say from loan apps or money lenders, it might be hard to quit. Setup yourself a goal and promise not to borrow or have any form of debt for the next five years. After this 5-year debt-free period, you will find yourself not wanting to have anything to do with debt again. The truth is that you can still survive with only your salary if there was no one to borrow money from.

3. Making a reliable investment

Investing in a promising venture is of the best financial goal you can set for the next five years as an employee. If you can dedicate these few years investing your salary and other income in different businesses the dividends from such medium term investment can change your financial status for the rest of your life. One good thing about investment is that it brings profits without stress, in other words, your capital increases without your efforts. This makes investment goal far better than savings in a long term financial planning.

4. Preparing for retirement

As an employee or salary earner, if you are close to the retiring age or feel like you should quit job and focus on your personal engagement, early preparation is good. Set this short period to make retirement plans that cover your personal finance. One of the best personal finance goals you can make in preparation to your retirement, even as a salary earner, include investing in a long-term financial or business deal. Search business ideas that can yield a successful outcome. It can be in the real estate, stock market, cryptocurrency or business establishment. Not making plans for retirement is one of the worst old age regrets for most employees and salary earners.

5. Mastering your budget and expenses

Budgeting is one of the most vital aspects of financial management. It is useful in both cooperate and personal finance. It is very hard to stick on one's budget as a s   alary earner as unexpected expenditure comes in each time there is money in the bank account. Some of these expenses often seem inevitable, hence, hinders one from growing financially. Dedicating the next five years of your life, as an employee, into mastering budget and controlling your spending is a great financial goal that can have a great transformative impact. One characteristic of salary that everyone known is that before you earn it, so many expenditures already queue-       up for it.

6. Securing your savings

While investment is very important for you as a salary earner, it comes with risk and sometimes, with very slow profit. Therefore, savings cannot be erased from the list of things that are important for transforming one's personal financial life. It is a great idea to set the next five years into saving certain amount of money on regular basis from your salary and targeting a gross amount within the set period. Wise saving is a habit and setting a saving goal in the next few years will have a great impact on your personal financial life.

In conclusion, setting short-term and intermediate financial goals is very important for your personal financial security and improvement of one's standard of living and status. For salary earners and employees, it is very much important because without such planning, it might be hard to achieve anything with the salary. You can set as much financial goal as you can but those in listed in this article are what we consider very crucial.

Author: Abasiama Akpan (Abas Obot)